ICRA revises bond prgms of IDBI, Vijaya and Indian Bank

Ratings agency ICRA has down-graded various bond borrowing programmes and facilities of IDBI Bank due to high level of stressed assets.
ICRA said the rating revision is on account of higher than anticipated stress, slower than expected pace of recovery and weak outlook for several credit intensive sectors which have led to sharp deterioration in asset quality indicators of the bank and has impacted the earnings profile of the bank.
The agency in a statement said that it has "revised the rating for IDBI Bank's Rs 8,000 crore infrastructure bonds programme, revised the rating for the Rs 3,000 crore Basel-III compliant Tier-II bonds programme of the bank."

"Reaffirmed the rating on (IDBI Bank's) fixed deposits programme on Rs 35,000 crore certificates of deposit programme. The outlook on the fixed deposits programme has been changed to negative from stable", ICRA said in a release.
ICRA said the earnings profile of IDBI Bank over the medium term is likely to remain weak given the relatively high share of stressed assets.
The revision in outlook is due to weakening asset quality and profitability profile of banks, post RBI's Asset Quality Review directing banks to bring consistency in NPA recognition for stressed accounts and make provisions accordingly, it added.

The rating agency also lowered the outlook on Vijaya Bank's Rs 500 crore bond issue to negative from stable.

The treasury gains are likely to provide some relief
against the elevated credit cost, which stood at 1.64 per cent of average total assets during H1-FY2017 for PSBs and is estimated to provide coverage against 25 per cent of the total credit provisioning requirements of PSBs, it said.
Given the short tenures of their loans, the drop in collections is likely to impact the near-term liquidity of MFIs, it said.
ICRA's analysis indicates that most MFIs will be able to service their debt for the next two to three months, assuming dip in the underlying portfolio collection efficiency.
Entities with significant proportion of debt linked to financial covenants may face more stress if the situation continues.