The proposed notes, to be issued through the bank's head office in India under its USD6 billion Medium Term Note (MTN) programme, will have a 5.5-year maturity and will be listed on the Singapore Exchange.
The rating outlook is stable.
The senior debt rating is subject to the receipt of final documentation, the terms and conditions of which are not expected to change in any material way from the draft documents reviewed by Moody's.
Ratings Rationale
The Baa3 rating reflects (1) the status of the proposed notes as senior unsecured obligations of the bank; (2) EXIM India's baseline credit assessment of ba2; and (3) Moody's assessment of the bank's very high dependence on, and the high probability of support from, the Government of India (Baa3 stable).
The rating outlook for the proposed notes is in line with the rating outlook on India's sovereign debt.
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The bank's standalone credit profile takes into account (1) its good liquidity management; (2) the strong and continuous capital support from the government as the sole shareholder; and (3) the bank's stable and improving profits.
On the other hand, the standalone credit profile also captures the recent stress in asset quality arising from the overall economic downturn. We expect asset quality to remain under pressure due to the challenging economic environment in India.
The bank's final Baa3 rating incorporates a two-notch uplift due to Moody's assumption of the bank's very high dependence on, and the high probability of support from, the government.
The Baa3 rating is the same as the government's rating.
The assumption is based on EXIM India's strong relationship with the government, including its establishment under a law that designates its quasi-sovereign status, the government's full ownership of the bank, and the bank's clear policy role as an export credit agency.
What Could Change the Rating Up
EXIM India's foreign currency debt ratings could be upgraded if: (1) the sovereign's foreign-currency debt rating is upgraded, given our assessment of the high likelihood of government support for the bank; and/or (2) there is material improvement in EXIM India's financial metrics -- including its asset quality -- which we consider highly unlikely in the next 12-18 months, given the challenging economic environment.
What Could Change the Rating Down
The debt ratings could face negative pressure if: (1) there are signs that suggest its government links are weakening, or if its policy role becomes less important to the economy; (2) the sovereign's foreign-currency debt rating is downgraded; (3) asset quality worsens.
Moody's current ratings on Export-Import Bank of India are:
- Long Term Issuer (foreign currency) rating of Baa3, stable
- Long Term Bank Deposits (foreign currency) ratings of Baa3, stable
- Short Term Bank Deposits (foreign currency) ratings of P-3
- Senior Unsecured (foreign currency) rating of Baa3, stable
- Senior Unsecured MTN Program (foreign currency) rating of (P)Baa3
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