Daily FT

Fitch...

It said BOC’s LT LC IDR takes into consideration that the risk of local- currency restrictions being imposed is lower than that of foreign- currency restrictions, should there be any, due to the sovereign having defaulted on its foreign- currency obligations. It reflects our view of the sovereign’s current and likely continued access to local- currency funding. The bank has so far maintained access to local- currency liquidity, such as via the Central Bank of Sri Lanka (CBSL).

The RWN on BOC’s National-Long Term Rating reflects the RWN on its LT LC IDR and also the potential for the bank’s creditworthiness relative to other Sri Lankan national scale ratings to deteriorate, given the potential stress on bank’s funding and liquidity, and also its significant exposure to the sovereign and broader public sector that raises its risk profile.

BOC’s ability to honour its senior, foreign currency obligations has been significantly impeded by the sovereign’s worsening credit profile which has limited the bank’s access to foreign currency funding and liquidity. “We believe that any foreigncurrency liquidity flows from the state or the CBSL is unlikely to be forthcoming, given the sovereign’s default status and precarious reserve position,” Fitch said.

“Rupee liquidity has also tightened following the bank’s excessive lending to the State in 2021, but we expect localcurrency liquidity to be much more manageable than foreign currency, supported by BOC’s strong domestic franchise as well as its ability to access the CBSL liquidity,” it added.

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2022-06-25T07:00:00.0000000Z

2022-06-25T07:00:00.0000000Z

https://dailyftepaper.pressreader.com/article/281629603950954

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