Moody’s cuts Indian Overseas Bank note programs

Moody's Investors Service said it affirmed Indian Overseas Bank's (IOB) local and foreign currency bank deposit and senior unsecured medium-term note program ratings at Ba1/NP and provisional Ba1, respectively, and the Ba1 rating on the senior unsecured debt issued out of its Hong Kong branch.

At the same time, the agency downgraded the bank's baseline credit assessment (BCA) and adjusted BCA to b3 from b2.

Moody's also downgraded the bank's subordinate medium-term note and junior subordinate medium-term note program ratings to provisional B3 from provisional B2 and provisional Caa1 from provisional B3.

The outlook was changed to negative from stable.

The deposit rating of Ba1 is underpinned by the bank's baseline credit assessment of b3, as well as an assumption of a very high level of systemic support. Moody's assessment of support for the bank by the Indian government (Baa3 positive) in times of need results in a five-notch uplift to the bank's deposit rating of Ba1 from its baseline credit assessment of b3.

The downgrade of the baseline credit assessment to b3 reflects the significant deterioration in the bank's asset quality and continued weakness in its profitability and capital position, the agency said.

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