Moody's downgrades ICICI's future bond sale via Bahrain branch

Ratings agency Moody's today downgraded ratings on ICICI Bank's future bond issuance through its Bahrain branch under the medium term notes (MTN) programme, but retained the ratings on its existing bonds.
"We have downgraded the provisional ratings on forex currency senior unsecured MTN programme of the bank's Bahrain branch to Ba2 from Baa3, because the forex bond ceiling for Bahrain is now at Ba2," Moody's said in a note.
"At the same time, we've retained the Baa3 ratings on its forex senior unsecured outstanding debt raised through this branch," Moody's added.
When contacted, the bank said "the rating action is linked with Bahrain's sovereign rating, and not with ICICI Bank. The rating of the bonds, which have already been issued out of our Bahrain branch, has been reaffirmed.

"Downgrading of Bahrain's rating would mean that any future bond issuance out of our Bahrain branch would carry a lower rating. We do not intend to make any such issuances," the bank said in a statement.
Moody's also downgraded the branch's counterparty risk assessment to Ba1(cr)/not prime (cr) from Baa3(cr)/P-3 (cr), apart from downgrading the local currency country risk ceiling for Bahrain to Ba1.

"The downgrading of the provisional ratings on the foreign currency senior unsecured MTN programme for the Bahrain branch to Ba2 is solely on account of the forex bond ceiling of Bahrain, which was downgraded to Ba2," it said.

Similarly, the downgrading of the branch's CRA is solely on account of the local currency country risk ceilings of Bahrain, which is also downgraded to Ba1.
"All other ratings under the MTN programme of the bank remain unchanged," Moody's said, adding the outlook on all ratings is stable.
On the ratings rationale, the agency said it affirms the ratings on the outstanding forex senior unsecured bonds issued by the Bahrain branch under the MTN programme at Baa3, on the basis of an unconditional standby letter of credit on these outstanding bonds through ICICI's Dubai branch.
"The features of the standby letter of credit satisfy the key criteria required to achieve full credit substitution. Consequently, ratings of these instruments are in line with Baa3 forex senior unsecured ratings of Dubai branch," it said.

It also affirmed the forex senior unsecured debt rating of the Bahrain branch as the only bonds outstanding are those covered by the standby letter of credit.