The bond is rated one notch below Bank of Ceylon's national rating of 'AA+(lka)' because as regulatory Tier II debt the funds will be used to pay off senior debt like depositors in the event of a liquidation.
The full statement is reproduced below:-
Fitch Rates Bank of Ceylon's Subordinated Debt 'AA(lka)(EXP)' Ratings Endorsement Policy
12 Sep 2013 3:14 AM (EDT) Fitch Ratings-Colombo/Mumbai/Singapore-12 September 2013: Fitch Ratings Lanka has assigned Bank of Ceylon's (BOC; BB-/Stable) proposed subordinated debentures of up to LKR8bn an expected National Long-Term rating of 'AA(lka)(EXP)'.
The debentures are to be listed on the Colombo Stock Exchange. BOC expects to use the proceeds to strengthen the bank's regulatory Tier 2 capital base and reduce asset and liability maturity mismatches.
The final rating is pending final documents that confirm information already received, inclu