Fitch, S&P Rate SBI's Proposed US Dollar Bond Issuance

Fitch Ratings on Tuesday assigned a 'BBB-(EXP)' rating to State Bank of India's proposed US dollar-denominated bond issuance.

Separately, S&P Global Ratings has also assigned its 'BBB' long-term issue rating to the US dollar-denominated senior unsecured notes that the London branch of the State Bank of India (SBI) proposes to issue.

The rating agencies did not specify the amount that the London Branch of State Bank of India (SBI) will raise through the issuance of dollar-denominated bonds.

However, S&P said the bond issuance represents a drawdown from SBI's USD 10 billion medium-term notes programme.

"The rating on the notes is equal to the long-term issuer credit rating on SBI (BBB/Stable/A-2). Our ratings on SBI reflect the bank's dominant market position and strong deposit franchise. SBI's market leadership and India's good economic growth momentum support its loan growth, asset quality, and profitability," an S&P statement said.

Last month, S&P had upgraded India's sovereign rating to 'BBB' from 'BBB-', citing robust growth. Subsequently, S&P also raised long-term issuer credit ratings of India's largest bank, SBI.

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 SBI's other unsubordinated and unsecured obligations, Fitch said.

"Fitch Ratings has assigned State Bank of India's (SBI, BBB-/Stable) proposed senior unsecured notes an expected rating of 'BBB-(EXP)'," the agency said in a statement.

The senior unsecured instruments are rated at the same level as the bank's Long-Term Issuer Default Rating (IDR), in line with Fitch's criteria.

SBI's IDR is driven by its Government Support Rating (GSR) of 'bbb-', which reflects Fitch's expectation that SBI is highly likely to receive extraordinary support from the Indian sovereign (BBB-/Stable), if required.

"This is due to SBI's very high systemic importance, which takes into consideration its market position as India's largest bank, the state's majority controlling ownership, and its broader policy role than that of peers. The Stable Outlook on the IDR mirrors that of the sovereign," Fitch added.