Moody’s lowers EXIM India BCA to ba3

Moody's Investors Service said it affirmed Export-Import Bank of India’s (EXIM India) foreign currency long-term deposit, issuer and senior unsecured debt ratings of Baa3.

The foreign currency senior unsecured medium-term note program rating was affirmed at provisional Baa3 and the foreign currency short-term deposit rating is also affirmed at P-3.

The agency also affirmed the Baa3 ratings on the bank's senior unsecured debt and provisional Baa3 senior unsecured medium-term note program issued out of its London branch.

At the same time, Moody's lowered the bank's baseline credit assessment (BCA) and adjusted BCA to ba3 from ba2.

The outlooks remain positive.

The Baa3 foreign-currency deposit, issuer and senior unsecured debt and provisional Baa3 program ratings reflect: (a) EXIM India’s standalone credit profile of ba3; and (b) the agency’s assessment of a very high dependence on, and the very high (government-backed) probability of support from, the Government of India (Baa3 positive).

Moody’s said the lowering of the BCA to ba3 reflects the sharp deterioration in the bank's asset quality, similar to other rated Indian state-owned banks. Its non-performing loan ratios increased to 7.9% at-end June 2016 from 2.9% at-end March 2015.

The source of this deterioration primarily comes from legacy loans, granted over 2008-13. Moody’s said its assessment of EXIM India's credit profile factors in a possible further increase in the NPL ratio, as more of these legacy loans may turn into NPLs.

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