Sampath Bank’s Rs10bn green bond assigned ‘A(lka)’ rating by Fitch

Sri Lanka lender Sampath Bank’s proposed 10 billion rupee green bond issue has been assigned an expected National Long-Term Rating of ‘A(EXP)(lka)’ by Fitch Ratings.

“Sampath’s National Long-Term Rating is used as the anchor rating for this instrument because the rating reflects the bank’s standalone financial strength and best indicates the risk of the bank becoming non-viable,” the ratings agency said.

The green bonds include a non-viability clause that states they will convert to ordinary voting shares upon the occurrence of a trigger event.

The full statement is reproduced below:

Fitch Rates Sampath Bank’s Proposed Basel III Subordinated Green Bond ‘A(EXP)(lka)’

Fitch Ratings – Colombo – 28 Apr 2026: Fitch Ratings has assigned Sampath Bank PLC’s (AA-(lka)/Stable) proposed Sri Lankan rupee-denominated Basel III-compliant subordinated green bonds of up to LKR10 billion an expected National Long-Term Rating of ‘A(EXP)(lka)’

The proposed bonds, which will mature in five and seven years, will be listed on the Colombo Stock Exchange. The bank plans to use the proceeds to strengthen its Tier 2 capital base as well as to support the bank’s balance sheet growth through financing green projects.

The bank expects the proposed bonds to qualify as Basel III-compliant regulatory Tier 2 capital. The green bonds include a non-viability clause that states they will convert to ordinary voting shares upon the occurrence of a trigger event, as determined by the Governing Board of the Central Bank of Sri Lanka.

The final rating is subject to the receipt of final documentation conforming to information already received.

Key Rating Drivers

Fitch rates the proposed Basel III Tier 2 bonds two notches below the bank’s National Long-Term Rating of ‘AA-(lka)’. This reflects Fitch’s baseline notching for loss severity for this type of debt and our expectations of poor recoveries. There is no additional notching for non-performance risks, as the proposed notes do not incorporate going-concern loss-absorption features.

Sampath’s National Long-Term Rating is used as the anchor rating for this instrument because the rating reflects the bank’s standalone financial strength and best indicates the risk of the bank becoming non-viable.

Fitch reviewed Sampath’s ratings with no rating action on 8 September 2025. See our latest rating action commentary, Fitch Upgrades 10 Sri Lankan Banks’ National Ratings and Affirms Five after Scale Recalibration, published on 21 January 2025, for the key rating drivers and sensitivities.

Rating Sensitivities

Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade

A downgrade of the bank’s National Long-Term Rating will lead to a downgrade of the expected subordinated debt rating.

Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade

An upgrade of the bank’s National Long-Term Rating will lead to an upgrade of the expected subordinated debt rating.

Source: Economy Next