Fitch rates IDBI Bank bonds AA+(ind)

Fitch Ratings said it assigned a national rating of AA+(ind) to IDBI Bank Ltd.'s senior and lower tier 2 subordinated bonds to be issued in the domestic market during 2010. IDBI plans to raise up to Rs. 40 billion through these instruments during the year. Fitch also said it assigned an AA-(ind) rating to IDBI's proposed Rs. 10 billion upper tier 2 subordinated bonds issue, reflecting the loss absorption role of hybrid instruments through their junior status and the in-built deferral clauses. These borrowings are planned under the "omni bond" and "flexi bond" programs of IDBI.

The bank's outstanding ratings include long-term foreign-currency issuer default rating at BBB-, short-term foreign-currency issuer default rating at F3, national long-term rating at AA+(ind), national short-term rating at F1+(ind), national rating for Rs. 15 billion upper tier 2 subordinated bond program at AA-(ind).

The outlook is stable.

The foreign-currency and national long-term ratings are driven by expectations of continued support from the government to enable IDBI to improve its competitiveness and financial standing, Fitch said, which remain weaker than that of other large government banks in India.

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