Moody's assigns investment grade rating to SBI's $10 billion bond programme

KOLKATA: Moody's Investors Service has assigned an investment grade rating to State Bank of India's proposed $10 billion medium-term note program.

The rating given is Baa3, which is same as India's sovereign rating. This is the lowest level in investment grade.

Moody's said that the outlook on the ratings is positive.

The MTN programme will be carried out from SBI's London branch and the bonds will be listed on the Singapore Stock Exchange.

The foreign currency senior unsecured MTN debt rating is anchored on SBI's baseline credit assessment and the likelihood of a very high level of support from the government in a stressed situation.

Moody's said the rating would change with any change in India's sovereign rating. "SBI's senior unsecured debt and deposit ratings could be upgraded if the India sovereign rating is upgraded," it said.

The assumption of high support is based on a combination of its large size and critical role in India's payment system, representing around 16.3% of system loans and 17.6% of system deposits as of end-March 2016, its nationwide reach, and the government's 60.18% stake in SBI.

SBI will capture one-fourth of the market following its merger with its associate banks.