Axis Bank's US programme gets Prime-1 rating

Moody's Investors Service has assigned a Prime-1 rating to the US commercial paper notes issued by Axis Bank through its $240 million fully supported commercial paper programme.

Axis Bank operates as a commercial bank and is the 11th largest bank in India, with a 2.9% market share based on total assets of Rs 1,806.5 billion as of March 31, 2010.

Axis Bank conducts business mainly in India and is the country's third largest private sector bank.

The commercial paper notes will be issued through the bank's Dubai International Financial Centre (DIFC) branch, a statement released here by Moody's said.

"The Prime-1 rating on the CP notes is based primarily on an irrevocable, direct-pay letter of credit provided by Citibank, N.A. (A1/Prime-1/C-), which fully supports the programme.

"The letter of credit provides full and timely support for the repayment of the commercial paper notes. The letter of credit is expected to terminate on August 3, 2012, unless extended pursuant to the terms on the programme documents," the statement said.

The Prime-1 rating of the CP notes issued through this programme is highly correlated with the Prime-1 rating of Citibank, NA, in that a downgrade of Citibank's Prime-1 may result in a corresponding downgrade of the CP notes, it added.

As of March 31, 2011, the bank had total unconsolidated assets of Rs 2,427.1 billion.

Citibank, NA, acts as the letter of credit bank, the depository, and facility agent. Citigroup Global Markets Inc. is the placement agent or CP dealer.

As the depository, Citibank is responsible for drawing on the letter of credit to pay maturing CP notes. The principal methodology used in this rating was The Fundamentals of Asset-Backed Commercial Paper published in February, 2003.

Other factors used in this rating are described in 'LOC-Backed CP Programmes: Structure is Key', published in August, 2000.