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Crisil assigns AA+ to IDBI's Rs 50 billion omni bonds issue

Written by: Staff

Mumbai, May 1 (UNI) India's premier ratings agency, Crisil, has assigned a ''AA+/Stable'' rating to IDBI's Rs 50 billion omni bonds issue and Rs 89.45 billion omni bonds issue.

The ratings agency has also reaffirmed its ''AA+Stable'' ratings to IDBI's Rs 30 billion flexi bonds issue, its bonds issue, including the aggregate of Rs 1.45 billion sub-bordinated bonds of the erstwhile IDBI Bank Ltd., and its Certificate of Deposit Programme.

Crisil has also reaffirmed its FAAA/Stable and P1+ ratings to IDBI's Fixed Deposit Programme as well as to its Certificate of Deposit Programme (less than one-year maturity, including the Certificates of Deposits of the erstwhile IDBI Bank Ltd.), respectively.

IDBI's Rs 25 billion short-term debt programme has also got its P1+ rating reaffirmed by Crisil.

A Crisil release said that IDBI's ratings reflect the high strategic importance of IDBI to, and majority ownership by, the Centre.

''The strategic importance is evident in the development finance role envisaged for IDBI by Parliament, while passing the IDBI Repeal Act 2003,'' the release stated, adding that ''the Government of India has demonstrably extended timely support to IDBI in the past, and Crisil expects such support to continue to be available should the need arise.'' ''Expected government support significantly improves IDBI's credit profile,'' the release added.

The ratings also reflect the expected improvement in IDBI's market position, resources profile and liquidity profile following its conversion into a bank and the merger of its erstwhile subsidiary, -IDBI Bank Limited with itself.

''The benefits of the merger would be particularly visible in areas of network expansion, training of employees, introduction of retail asset and working capital products, and setting up and effectively utilising a technology platform,'' stated the release.

Going forward, the timeframe and effectiveness of the integration of IDBI Bank Limited with IDBI would be a key monitorable.

IDBI's capital adequacy and asset quality position has improved after it received stressed asset swap package from the Centre. The rating, however, is tempered by IDBI's continuing stressed asset quality and weak earnings profile, stated the release, adding that Crisil has not factored in a merger of a public sector bank or another financial institution in its current ratings.

Industrial Development Bank of India Ltd's (IDBI) ratings (including the ratings on the outstanding instruments of the erstwhile IDBI Bank Limited) have been reaffirmed subsequent to the amalgamation of IDBI Bank Limited with IDBI, with effect from April 2, 2005, pursuant to the scheme of amalgamation announced by the Reserve Bank of India.

On IDBI's future outlook, Crisil stated that IDBI's credit profile was expected to continue to benefit significantly from support by its majority owner, the Government of India, given its unique position as the only bank with a focus on development finance.


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