S&P Global Ratings has confirmed the long-term BB and short-term B ratings of currency issuers on IDBI Bank.
It also confirmed the rating of the BB program on senior unsecured notes as part of its medium term note (MTN) program and then withdrew the ratings at the bank’s request.
S&P said the outlook was negative at the time of the pullback. “We have confirmed the ratings because we expect the improved financial performance of IDBI Bank to offset the risk of the bank’s weakening link with the government.”
The Union Cabinet approved the strategic divestment as well as the transfer of management control to IDBI Bank. “We saw this as a key transition risk for the rating over the next 12-18 months.”
The high uncertainty associated with a possible divestment schedule increases the risk of transition. S&P said the strategic sale of IDBI Bank is likely to be difficult in the current year due to the low valuation of the bank’s shares and investor mistrust under Covid-19.
S&P said IDBI Bank’s asset quality remains below the industry average despite improving from historically very low levels.
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