Crisil raises rating on BoB Housing Finance Ltd

Mumbai, May 17: Crisil, India's premier rating agency, has upgraded its rating on BoB Housing Finance Limited's debt programme from 'AA+/Positive' to 'AAA/Stable', following the decision of the Boards of both BoB Housing and its parent, Bank of Baroda (BoB), to merge.

A Crisil release issued here said that following the announcement of the intended merger in September 2004, Crisil had revised the outlook on the rating on BoB Housing to 'positive'.

Thereafter, Bank of Baroda negotiated with the National Housing Bank (NHB) for acquiring the latter's 32.9 per cent stake in BoB Housing and in March this year, the managements of BoB and NHB agreed on a mutually acceptable price following which NHB transferred its stake to BoB and BoB Housing emerged as a 100 per cent subsidiary of it, the release said.

The merger of BoB Housing and BoB, including the completion of legal formalities, is likely to be completed by September. Following this, BoB will take up BoB Housing's assets and debt obligations and the credit risk profile of BoB Housing will be identical to that of BoB.

BoB Housing's overall credit risk profile continues to reflect the strong financial, managerial and operational support it receives from BoB. However, Crisil said that ''BoB Housing's weak asset quality and average earnings and resource profile temper this rating strength to some extent.'' On the future outlook of BoB Housing, Crisil stated that BoB Housing will continue to derive strong support from BoB, during the period leading up to the merger.

''Crisil's rating on BoB will continue to derive strength from the support extended by Government of India, and from the bank's strong market position and resource profile,'' the release added.

UNI