Fitch rates IndusInd Bank bond A(ind)

Fitch Ratings said it revised the outlook on India-based IndusInd Bank Ltd. to negative from stable and assigned an A(ind) national long-term rating to the bank's Rs. 500 million upper tier 2 bonds.

The agency also affirmed all of IndusInd Bank's ratings, including national long-term at A+(ind), national short-term at F1+(ind), Rs. 5.575 million subordinated debt at A+(ind), Rs. 1.5 million upper tier 2 bonds at A(ind), Rs. 2.5 million certificates of deposit program at F1+(ind), individual D and support at 5.

The revised outlook reflects the reduction in the capital adequacy ratio of the bank. The agency said IndusInd Bank's regulatory CAR fell to 9.8% at June and its equity to assets ratio (4.5% at June; 4.9% at March) is the lowest in the national rating category among Indian banks rated by Fitch.

The agency said IndusInd Bank plans to raise equity from strategic investors, although the timing of the issue and the quantum of infusion has yet to be announced. The bank's ratings could come under downward pressure if its plans to raise equity does not materialize ahead of the proposed capital charge for operational risk under the proposed Basel II guidelines that could be introduced in March 2007. An improvement in its capitalization could result in the outlook being revised to stable, Fitch said.

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