Moody's Investors Service has assigned a Baa3 rating to Indian Overseas Bank's (IOB) proposed USD senior notes drawdown from its US$1 billion Medium Term Note Programme through its Hong Kong branch.
The outlook for the rating is stable.
The Baa3 rating is underpinned by IOB's: (1) moderate franchise with dominance in Tamil Nadu, the southern part of India, and a 3% share in system deposits; (2) average financial fundamentals, including asset quality, capital levels and profitability ratios, which are in line with other Indian mid-sized public-sector banks; and (3) close relationship with the government of India, via the latter's 69.62% holding, and as evidenced by repeated capital infusions into the bank.
Therefore, Moody's assessment that the probability of systemic support for IOB, if needed, is very high, and results in a two-notch lift in its global local currency deposit rating of Baa3 from its standalone rating of D/ba2.
The methodology used in this rating is Moody's Consolidated Global Bank Rating Methodology published in June 2012. Please see the Credit Policy page on www.moodys.com for a copy of this methodology.
Indian Overseas Bank, headquartered in Chennai, had assets of INR2.2 trillion at March 2012.