Fitch upgrades IDBI

Fitch Ratings said it upgraded IDBI Ltd.'s short-term foreign-currency rating to F3 from B and its $600 million bonds due 2009 to BBB- from BB+ and affirmed the national long-term rating at AA+(ind) and national short-term rating at F1+(ind).

This follows the upgrade of the bank's long-term foreign-currency issuer default rating to BBB- from BB+, individual rating to C/D from D/E and support rating to 2 from 3.

The outlook is stable.

The agency said the upgrade of IDBI reflects the expected support from the Indian government, which IDBI has enjoyed in the past and is likely to continue into the future, following its conversion into a commercial bank and the government's own improved ability to provide such support, as reflected in the upgrade of the sovereign issuer default rating to BBB-.

The upgrade of the individual rating reflects the gradual improvement in IDBI's financial condition over the years and the additional improvement in the bank's asset quality following the transfer of Rs. 90 billion of stressed assets to a government-sponsored special purpose vehicle in September 2004, though its profitability remains weaker compared to other Indian banks that are also rated C/D, Moody's said.

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