Moody's assigns Baa2 to SBI issue

Moody’s Investors Service on Monday assigned Baa2 long-term rating to State Bank of India’s (SBI’s) senior unsecured bond issue under its existing medium-term note programme.

SBI is likely to raise $1 billion through the bond issue this month. This is part of the bank’s $5-billion medium-term note (MTN) programme launched in 2004. Another rating major, Standard & Poor’s, has assigned BBB- to the issue. The issue will have a tenure of five years. The bonds will be issued by the bank’s London branch. Moody’s said the issue was rated at the same level as India’s foreign currency debt ceiling of Baa2 with a stable outlook.

The money raised from the bonds — which will be listed on the Singapore stock exchange — will be used for the bank’s global operations.

The rating took into consideration the bank’s robust liquidity position, good capitalisation levels, modest recurring profitability, while also reflecting the challenge SBI faced in maintaining a satisfactory asset quality given the growing trend in loan delinquencies in India as a result of the economic slowdown, Moody’s said.