Moody’s Investors Service has downgraded the senior unsecured debt and local currency deposit ratings of State Bank of India (SBI).
According to Moody’s, SBI’s new rating for both the debt as well as deposit is ‘Baa3’ against ‘Baa2’ earlier. The new ratings are on a par with the Government of India’s foreign currency bond rating. Senior unsecured debt means these securities have priority ahead of all other unsecured debt if a bank/company goes out of business.
Moody’s decision to lower SBI’s senior unsecured debt rating is a reflection of the fact that the bank’s standalone credit profile continues to face negative pressures in the context of a slowdown of the Indian economy and the bank is likely to seek another capital injection from the Government at the end of the current fiscal year.
Even as Moody’s affirmed the ‘D+’ financial strength rating of India’s largest bank, it changed the outlook on this rating to negative from stable.