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* Fitch maintains SANASA Development Bank’s ‘BB+(lka)’ on Rating Watch Negative
Thu, Sep 14, 2023, 02:54 am SL Time, ColomboPage News Desk, Sri Lanka.

Sept 13, Colombo: Fitch Ratings has maintained the Rating Watch Negative (RWN) on SANASA Development Bank PLC’s (SDB) National Long-Term Rating of ‘BB+(lka)’.


RWN Maintained: The RWN on SDB’s National-Long Term Rating reflects the potential for the bank’s creditworthiness relative to other entities on our Sri Lankan National Ratings scale to deteriorate. There are heightened near-term downside risks to SDB’s credit profile from potential capital and funding stress from the restructuring of the sovereign’s (Long-Term Foreign-Currency Issuer Default Rating (IDR): RD; Long-Term Local-Currency IDR: C) debt obligations while access to foreign-currency funding remains constrained.

The resolution of the RWN with an affirmation of the ratings could occur when there is further clarity around the sovereign debt restructuring process pointing to a reduction in stresses that have affected the banking sector in the past several quarters.

Debt Restructuring Weighs on OE: We believe risks to Sri Lankan banks’ operating environment (OE) remain high despite the exclusion of the banks’ holdings in Sri Lankan rupee-denominated government securities from the sovereign domestic debt restructuring. This is due to the banks’ predominant exposure to the very weak domestic economy and debilitated sovereign’s credit profile, which continues to hinder banks’ operational flexibility.

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