The proposed Sustainable Bond has been rated one notch below SDF’s issuer rating, reflecting its subordinated and unsecured nature. The instrument ranks pari passu with other subordinated obligations of the Company and is contractually senior to claims of both ordinary and preference shareholders in the event of liquidation. Deloitte Associates Sri Lanka has been engaged as the Independent External Verifier for the proposed Sustainable Bond.
SDF’s net interest income grew by ~48.3% YoY in FY25, driven by higher asset yields and lower funding costs. SDF reported a net profit of LKR~473.8mn in FY25 (FY24: LKR~249.6mn). As of FY25, the CAR stood at ~20.6%, supported by a net capital base of LKR~3.7bn, reflecting a comfortable capital position. The proposed bond issuance will further increase the CAR to ~31.7%, providing room for growth.
The rating is dependent upon the Company's ability to preserve its unique accessibility to the rural segment in the island. Sustaining its growth momentum while improving margins will be key for the Company. The rating will rely on the successful execution of the Company's strategy to grow its asset base while preserving the asset quality. Meanwhile, from a bondholder's perspective, the prudent management of Sustainable Bond proceeds and the implementation of a comprehensive governance framework are critical.