Oct 05, Colombo: Fitch Ratings has downgraded the National long-term rating of the Housing Development Finance Corporation (HDFC) Bank of Sri Lanka today to 'BBB+(lka)' from 'A-(lka)' and have pronounced the rating outlook to remain negative.

Fitch has simultaneously downgraded the rating on the following outstanding senior unsecured debentures issued by HDFC to ‘BBB+(lka)’ from ‘A-(lka)’: 2005/2010, 2015, 2020 senior unsecured redeemable debentures of Rs. 250 million 2005/2009 senior unsecured redeemable debentures of Rs. 125 million.

The rating action reflects Fitch's view that the continued escalation of HDFC's inherent interest rate risk has weakened its financial profile to a level that cannot sustain a higher rating over the medium term.

HDFC is a licensed specialized bank whose main shareholder (51%) is the government of Sri Lanka. The bank is one of two that specialize in lending to the low and middle income segment. HDFC has a network of 21 outlets, and an asset base of Rs. 13.2 billion at the end of June 2008.