The Hindu Business Line : ‘Negative’ outlook for StanChart India bonds

Mumbai, May 5 The rating outlook on subordinated bonds of the Indian operations of Standard Chartered Bank (SCB India) has been downgraded to ‘negative’ from ‘stable’ by credit rating agency Crisil. The rating on the bonds, however, has been reaffirmed at ‘AAA’.

The agency also downgraded its rating on Standard Chartered Investments and Loans (India) Ltd’s (SCILL’s) non-convertible debentures to ‘AA+/ Negative’ from ‘AAA/ Stable’.

The outlook revision on SCB India and SCILL is driven by Standard & Poor’s revision of its outlook on the long-term counterparty rating on SCB UK and its group entities to ‘negative’ from ‘stable’.

The outlook revision by S&P, according to a Crisil statement, reflects its view that SCB UK’s impairment charges may rise sharply in the short to medium term because of the simultaneous economic downturn across many of the key countries in which the bank operates.

The downgrade on the long-term rating on SCILL reflects a weakening in SCILL’s business and earnings profile, following significant slowdown in its lending over the past two years. Given the increasingly challenging operating environment for NBFCs in India, Crisil believes that the economic benefits for the parent from SCILL are likely to remain weak.

SCILL’s asset book, according to Crisil, has shrunk to Rs 490 crore as on March-end 2009 from Rs 1,307 crore as on March-end 2008. The rating agency said that SCILL is expected to incur a net loss of Rs 9.75 crore in FY2008-09.

The rating on the short-term debt instruments of both the entities has been reaffirmed at ‘P1+’.

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