Moody’s downgrade hits 11 Indian banks

ICICI, SBI among those involved.

Moody’s Investors Service has downgraded the subordinated debt ratings of 11 Indian banks including SBI, ICICI Bank and HDFC Bank. The subordinated debt and junior subordinated debt ratings of eight public sector banks and three private lenders were lowered following a review that started on June 3, Moody’s said.

The senior obligation ratings of the banks and their stand-alone baseline credit assessments were not affected, however. The other banks affected are Axis Bank, Bank of Baroda, Bank of India, Canara Bank, IDBI Bank, Indian Overseas Bank, Syndicate Bank and Union Bank of India.

The downgrade reflects the increasing international trend of imposing losses on holders of subdebt securities (creditor “bail-in”) as a pre-condition for distressed banks to receive government support, Moody’s said. Moody’s assumes that Indian government support is less likely to be forthcoming for the holders of such securities.