Dec 23, 2020

HNB and Sampath Bank not to pursue Moody’s ratings Featured

Hatton National Bank and Sampath Bank have decided not to pursue Moody’s ratings.

The duo are the only private commercial banks to have had a Moody’s rating. The other is Bank of Ceylon.

Their decisions were revealed via a filing to the CSE this week.

HNB said it has decided not to renew the rating agreement with Moody’s Investor Service Singapore as the ratings issued in 2012 has not been used in support of any debt instrument to date.

HNB was the first local bank to obtain an international credit rating.

Analysts said the rating was obtained back then with the intention of tapping the international capital markets through the issuance of foreign currency denominated bonds. However due to the availability of other funding lines at much cheaper rates the bank did not pursue this option over the last eight years, though it continued to maintain this international rating.

However, with the recent downgrade of the sovereign rating by Moody’s and the high yields of sovereign bonds trading in the secondary market it is unlikely that the Bank would consider entering the international bond markets in the near future, analysts added.

Separately Sampath Bank too disclosed it would discontinue the credit rating obtained from Moody’s with immediate effect.

Opposition Parliamentarian Dr. Harsha de Silva viewed the move as a result of Government pressure, tweeting “So @SampathBankPLC (11.3% held by EPF, ETF; 2nd largest) and @hnbplc (25% SLIC/EPF largest shareholder) have discontinued services of rating agency @MoodysInvSvc after major attack launched on them by Min @an_cabraal et al after their Caa1 downgrade of #SriLanka.”