State Bank of India’s proposed issuance of USD senior notes through its London branch have been assigned a ‘Baa2’ rating by Moody's Investors Service. The outlook for the rating is stable.
India’s largest lender is understood to be planning to raise about $1 billion through the senior notes.
The ‘Baa2’ rating is underpinned by State Bank of India’s dominant franchise as the largest commercial bank in India, and its moderate financial position, said the global credit rating agency in a statement.
The rating also reflects SBI’s limited ability to manage its capital situation and the protracted challenges it faces in securing capital from the Government of India.
The rating incorporates Moody's assessment that the probability of systemic support for State Bank of India, if needed, is very high, based on its position as the largest systemically important bank in the country.
Moody’s has also referred to SBI’s critical function in India’s payment system, processing well over 16 per cent of all transactions, its 61.6 per cent ownership by the government, historical evidence of government support for the bank, and its implicit policy role in financial inclusion, both social and fiscal.
Taking into account the abovementioned factors, Moody’s said the ‘Baa2’ rating benefits from a one-notch lift from its standalone rating of ‘D+/baa3’.