Fitch gives expected A(ind) rating to Andhra Pradesh notes

Fitch Ratings said it assigned an expected rating of Fitch A(SO)(ind)(exp) to Andhra Pradesh State Financial Corp.'s planned Rs. 2 billion offering of bonds due 2022 with a call option in the third year.

This proposed offering replaces the company's previously planned Rs. 2 billion issue, which was assigned an expected rating of Fitch A(SO)(ind)(exp) in November.

The rating reflects the credit profile of the government of Andhra Pradesh given its guarantee of the bonds. The agency said it derives additional comfort from the bonds' structured payment mechanism and tripartite agreement among the issuer, the state government and the bond trustee.

Fitch said Andhra Pradesh's credit profile benefits from it being the third-largest sub-national economy in India with a strong service sector. However, the state is more leveraged than other Indian sub-national economies of similar size, the agency said.

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