Fitch withdraws IDFC's rating, reaffirms 'good credit quality'

Fitch today withdrew its rating on IDFC Ltd following demerger of the company's financial business into a banking unit, while reaffirming the investment grade it had.

"Fitch Ratings has affirmed India-based IDFC Limited's (IDFC) Long-Term Issuer Default Rating (IDR) at 'BBB-' with stable outlook. The rating has simultaneously been withdrawn," it said in a release.

Fitch said it is withdrawing IDFC Ltd's rating as it is no longer considered to be relevant to the agency's coverage because "the company has demerged its financial business into a separate banking subsidiary, IDFC Bank Limited".

BBB rating indicates low risk of default.

As part of the reorganisation, IDFC Ltd has transferred the bulk of its assets to the newly formed bank and assumed the role as the ultimate holding company of the group. IDFC Bank kick-started its operations from October 1.
 

Fitch Ratings said IDFC's IDR is driven by its standalone credit strength and factors in its expectation that company's profile will ultimately benefit from its transition to a bank.

"The rating affirmation is underpinned by its capitalisation and factors in structural changes to the group's business and risk profile with IDFC's banking foray."

Further, it said capital is still the strongest metric supporting IDFC's credit profile.