Fitch assigns AA+ to IDBI's Omnibonds program

Fitch Ratings said it has assigned a national long-term rating of AA+ to the Rs. 50 billion Omnibonds program of the Industrial Development Bank of India Ltd. (IDBI).

At the same time, IDBI's other ratings have been affirmed at long-term foreign currency issuer default BB+, short-term foreign currency B, national long-term AA+, national short-term F1+, individual D/E and support 3.

The outlook is stable.

Fitch said the ratings reflect government support received by IDBI in the past, which is expected to continue following its conversion into a commercial bank.

The bank's individual rating is likely to improve in the near term, reflecting the gradual strengthening of its balance sheet and income profile.

Although IDBI's merger with its commercial banking subsidiary in March 2005 enabled IDBI to diversify its lending activities away from project finance and reduce its cost of funds, the full effect of the merger will take a few years to fully reflect in its financials, as deposits increase from less than a third of total liabilities and retail assets grow from 16% of the loan portfolio, the agency said.

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