Moody's rates Bank of India notes Baa2

Moody's Investors Service said it assigned a Baa2 rating to the foreign-currency subordinated notes to be issued by Bank of India's London branch under its $1 billion medium-term note program for an expected amount of $200 million and a Baa3 rating to any perpetual non-cumulative subordinated debt to be issued under the same program.

The ratings incorporate the bank's standalone financial strength and the high likelihood of support from the government of India in the event of need, the agency said. Bank of India's standalone financial strength is supported by a broad-based lending and deposit franchise and by one of the most significant international franchises amongst Indian banks. The rating also takes into account the bank's moderate profitability and capitalization and its improving asset quality.

Moody's said the slow progress in fully leveraging upgraded information technology infrastructure and improving income-generating capacity constrains the ratings of Bank of India and of most public sector banks in India.

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