Live news , top stories, corporate news, company news, sector news, economy news, results analysis news, ceo interviews, fund manager interview, advisor interview, market news, bazaar talk, hot stocks news, ipo news, commodities news, mutual fund news, insurance news, news wire
22 March, 2018 19:27 IST
Fitch rates State Bank of India's proposed senior debt 'BBB-(EXP)'
Source: IRIS | 30 Mar, 2017, 08.58AM
Comments  |  Post Comment

Fitch Ratings has assigned State Bank of India's (SBI, BBB-/Stable) proposed senior unsecured debt an expected rating of 'BBB-(EXP)'.

The notes will constitute SBI's direct, unconditional, unsubordinated and unsecured obligations and will at all times rank pari passu among themselves and with all of its other unsubordinated and unsecured obligations. The tenor of the issue is expected to be around three years and the notes are to be issued by SBI's London branch.

The final rating is subject to the receipt of final documentation conforming to information already received.

The senior unsecured instruments are rated at the same level as the bank's (Q,N,C,F)* Issuer Default Rating (IDR), in accordance with Fitch's criteria.

SBI's IDR is driven by its Support Rating Floor of 'BBB-', which is at the same level as its Viability Rating of 'bbb-', implying that the bank's standalone credit strength also underpins the IDR. The Support Rating Floor reflects Fitch's expectation of a high probability of extraordinary support from the government of India (BBB-/Stable), if necessary, given the bank's very high systemic importance and quasi-sovereign status.

SBI's core capitalisation should witness an improvement in the financial year ending-March 2017 (FY17). The bank received around 75% of the earmarked USD 1.1 billion (around 5% of FY16 equity) in new capital from the government in January 2017 and is likely to receive the remaining share before end-FY17. It also has plans to raise an additional USD 2.2 billion directly from the market, for which it has received shareholder approval, although that maybe pushed out to FY18.

The bank's non-performing loan (NPL) ratio of 7.2% at end-9MFY17 and stressed asset ratio of 9.5% were stable on a sequential basis and remain considerably lower than those of other large government banks. Absolute NPL growth has seen a sharp slowdown on a sequential basis since FY16. Loan growth was negatively affected owing to demonetisation during 3QFY17, but deposits swelled, with SBI's low-cost deposit ratio surging well above 45%. Credit costs remained a burden on earnings in 9MFY17, leading to net profit growth of -12%. This more than offsets gains from treasury and 4% stake sale of SBI's life insurance subsidiary.

SBI is set to merge with its five associate banks starting April 2017, after which its standalone assets will account for nearly a one-fourth share of India's banking-system assets.

Shares of the bank gained Rs 5.6, or 1.98%, to trade at Rs 287.75. The total volume of shares traded was 18,346,222 at the BSE (3.58 p.m., Wednesday).

Comments Post comment 
 Post Comment
Name Email
Security Code type    into this box
Related Articles
Suven Life Sciences secures 3 overseas product patents - 22-Mar-2018 12:24
Cox & Kings sells 11.58% stake in subsidiary - 22-Mar-2018 12:20
Steel Strips Wheels receives 7,000 wheel order from UK aftermarket - 22-Mar-2018 10:37
Zensar Technologies acquires US based Cynosure Inc - 22-Mar-2018 10:33
IRB Infrastructure Developers wins Rs 34 bn Hapur bypass BOT project - 22-Mar-2018 10:18
Sun Pharma announces USFDA approval of ILUMYA drug - 22-Mar-2018 09:39
Ashok Leyland bags orders for 2,100 buses from Tamil Nadu - 21-Mar-2018 10:17
Suzlon designs and produces India's longest wind turbine blade - 21-Mar-2018 10:11
Mphasis partners with Plug and Play - 21-Mar-2018 09:55
Force Motors signs JV agreement with MTU Friedrichshafen GmbH - 21-Mar-2018 09:48
TCS partners with Saudi Real Estate Refinance Co - 21-Mar-2018 09:44
Home  |   Shares  |   F&O  |   Mutual Funds  |   Loans  |   Insurance  |   News Centre
Wealth Tracker  |   Newsletters  |   Tax Corner  |   NRI Centre  |   Advertise
© All rights reserved. IRIS Business Services Limited
A Disclaimer