Feb 14, 2012 (LBO) - Fitch Ratings Lanka has confirmed Pan Asia Banking Corporation's (PABC) proposed subordinated debentures of up to 2.0 billion rupees at 'BBB-(lka)'.
The issue is rated one notch below PABC's national long-term rating of 'BBB(lka)' with a stable outlook reflecting its debt-like features, a statement said.
"PABC's ratings reflect continued improvements in its credit profile from 2010 relative to local peers, particularly asset quality and capitalisation, supported by structural changes within the bank over 2009-2010," Fitch said.
"The ratings also reflect the bank's small but steadily growing franchise and market share, supported by its recent branch expansion."
The rating agency said the bank's credit metrics have moved closer to that of higher-rated peers.
"Its ratings could be upgraded if it maintains capitalisation and liquidity amid its rapid asset growth as was experienced from 2010 to H111, while also sustaining improvements in asset quality."
The proposed debentures have a maturity of five years with a principal bullet repayment at maturity and do not contain any deferral clauses.
Terms of interest payment have been amended since the rating assignment, and coupon payments will be made semi-annually or annually or at maturity with fixed or floating rates, Fitch said.
Initially, debentures of 750 million rupees are to be listed on the Colombo Stock Exchange by way of an introduction, with the remainder to be listed upon issuance.
PABC is a licensed commercial bank 41 percent owned by a high net-worth businessmanDhammika Perera and related parties. It had 56 branches at end-September 2011.