Global credit rating agency, Moody’s Investor Service has downgraded the country’s largest bank, State Bank of India’s (SBI) senior unsecured debt and local currency deposit ratings to ‘Baa3’ or lowest investment grade rating from ‘Baa2’. The rating agency has also changed the outlook on the bank’s financial strength rating to negative from stable as the economic slowdown puts pressure on its credit quality.
Besides, the revised rating is on par with Government of India’s (Baa3 Stable) foreign currency bond rating. The combination of increasing pressure on credit fundamentals and the ongoing reliance on the fiscally constrained Indian government to maintain capital adequacy ratio are factors behind the rating downgrade at a level no higher than the sovereign.
Further, the outlook for SBI’s senior unsecured debt and local currency deposit is however stable.
