Moody's assigns Baa2 to EXIM India's note drawdown

Moody's Investors Service, ("Moody's") has assigned a Baa2 rating to Export-Import Bank of India's (EXIM India) proposed senior unsecured notes, issued under its US$10 billion Global Medium Term Note (GMTN) program.

The drawdown is from its head office in India, and will be listed on the London Stock Exchange International Securities Market ("ISM") and the Singapore Exchange Securities Trading Limited ("SGX-ST").

The rating outlook is stable.

The senior unsecured rating is subject to receipt of final documentation, the terms and conditions of which are not expected to change in any material way from the draft documents reviewed by Moody's.

RATINGS RATIONALE

EXIM India's senior unsecured rating incorporates (1) the bank's Baseline Credit Assessment (BCA) of ba3; and (2) our assessment of a very high dependence on, and the very high (government-backed) probability of support from, the Government of India (Baa2 stable).

The BCA of ba3 incorporates EXIM India's strong capital buffers and a good liquidity profile with assets and liabilities well matched in terms of both maturity and currency. In addition, the BCA also accounts for the deterioration in the bank's asset quality, which we expect will increase credit costs and take a toll on overall profitability.

Our assessment of the very high (government-backed) probability of support results in its senior unsecured rating receiving a four notch uplift from its BCA of ba3. This is underpinned by the bank's close relationship with the government due to: 1) its policy role in achieving the government's external trade policy objectives as well as playing a part in executing the government's foreign policy goals and 2) full government ownership as mandated under law.

WHAT COULD CHANGE THE RATINGS -- UP

EXIM India's senior unsecured rating could be upgraded if the sovereign's foreign-currency debt rating is upgraded and the bank's financial metrics, including its asset quality, improve materially. Such a scenario is highly unlikely over the next 12-18 months because of the challenging economic environment.

WHAT COULD CHANGE THE RATINGS -- DOWN

The rating could face negative pressure if (1) there are signs that the bank's links with the Indian government are weakening or its policy role becomes less important to the economy, (2) the sovereign's foreign-currency debt rating is downgraded, or (3) the bank's asset quality worsens materially.

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