S&P cuts rating outlook of SBI, ICICI, HDFC Bank

India's top 10 banks, including the SBI, ICICI Bank and HDFC Bank suffered a collateral damage following the Standard and Poor's lowering the country's sovereign rating outlook.

The global agency downgraded the rating outlook of these banks, stating the move reflects "the outlook on the sovereign credit rating on India".

While it is only the outlook which has been lowered at the moment, the S&P warned that the banks' ratings can also be revised downward if similar steps are taken for sovereign rating. Other lenders included in the latest rating outlook revision are, Axis Bank, Bank of India, IDBI Bank, Indian Overseas Bank, Indian Bank, Syndicate Bank and Union Bank of India.

Besides, the Infrastructure Development Finance Company Ltd (IDFC) is also impacted by the rating action.

Experts feel that the S&P's move will not significantly impact the cost of resource mobilisation of the Indian banks since they raise bulk of the money from the domestic sources. Justifying the move, it said, "S&P does not rate Indian banks above the rating on the sovereign because of the direct and indirect influence that the sovereign in distress would have on banks' operations including ability to service foreign currency obligations."

It said the banks get influenced if the country's sovereign rating itself is affected because they are subject to government policy and regulation and they invest a significant portion of their funds in state securities. The banks are also majority owned by the government.

"We could revise the outlook to stable if we take a similar action on the sovereign rating," it said. However, the S&P risk assessment on the country's banking industry remains unchanged. 

Indian equity market holds a lot of opportunities!

India provides tremendous opportunities for financial inclusion via penetration and development in the Indian equity market today, a survey conducted by Nielsen Company said.

The top 5 cities in India contribute 84 per cent to trading in 2009-10, a figure up by 6 per cent from 2001-02. Cash trading volumes from Mumbai and Delhi alone account for 65 per cent of cash trading and 60 per cent of mutual funds volume.

The survey polled 1,207 current and potential retail investors from 12 cities across all geographic zones and levels of development, ages and occupation; 60 corporate, including banks and financial institutions, from the 4 metros and 120 SMEs from clusters in 12 cities throughout India.
There is also a great opportunity to impart financial knowledge. Nearly 94 per cent of retail investors have shown a strong willingness to participate in financial training programmers if they were to be offered in their vicinity.

The survey identified an appreciation of mobile phones as an enabler, a positive perception of competition as delivering better services and lowering trading costs and a desire for receiving financial training across the country. A clear majority of 56 per cent of retail investors across the country see mobile phones as the preferred channel that will likely enable them to participate in the equity market.

Source:Economic Times

SBI raises $1 bn via bonds issue from US markets…

The country's largest public sector lender, State Bank of India, has raised $1 billion (about Rs 4,700 crore) through an issue of bonds to qualified institutional buyers.

State Bank of India, acting through its London Branch, successfully priced an offering of USD one billion of senior unsecured bonds due 2015, the bank said.

"This is a signature deal, despite market turbulence and volatility. In terms of deal size, order book multiple, diversification into new investors in the US, and number and quality of investors, we achieved our objectives with this issuance,"

"We believe the success of this transaction will also allow Indian issuers to more easily access the US markets," SBI Chairman O P Bhatt said.


SBI's debut issuance allows it to broaden its debt investor base and to access large, highly capitalised US institutional investors in the private placement market, the bank official added.

The offering was priced at a coupon rate of 4.50 per cent per annum. In terms of allocations, US-based investors received 55 per cent of the allocation while Asian investors were allocated 28 per cent and the balance 17 per cent across European investors.

In terms of investor type, asset and fund managers subscribed for 63 per cent of the deal, commercial and investment banks subscribed for 9 per cent, private banks subscribed for 15 per cent and insurance/pension funds subscribed for 4 per cent.

Strong interest from the US-based investors underscores SBI's strong credit profile and its position as India's largest bank.

Source: PTI News

Read more at: http://profit.ndtv.com/news/show/sbi-raises-1-bn-via-bonds-issue-from-us-markets-84577?cp