Allahabad Bank’s bonds put on ‘rating watch evolving’

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Kolkata | Updated: September 8, 2019 3:26:20 AM

According to Fitch Ratings' rating definitions, Rating Watches indicate that there is a heightened probability of a rating change.

The proposed merger of Kolkata-headquartered Allahabad Bank and Chennai-based Indian Bank will make the entity the seventh largest bank in IndiaThe proposed merger of Kolkata-headquartered Allahabad Bank and Chennai-based Indian Bank will make the entity the seventh largest bank in India

Credit rating agency India Ratings and Research (Ind-Ra) has placed state-run Allahabad Bank’s outstanding Rs 1000 crore Basel III compliant bonds on Rating Watch Evolving (RWE), following the government’s announcement about the Kolkata-based lender’s proposed merger with Indian Bank.

In a stock exchange filing on Saturday, Allahabad Bank said India Ratings, the Indian unit of the US-based Fitch Group, has placed its Long Term Issuer Ratings of “IND AA-” on Rating Watch Evolving (RWE) after the finance ministry’s announcement regarding the proposed amalgamation.

According to Fitch Ratings’ rating definitions, Rating Watches indicate that there is a heightened probability of a rating change. Rating outlook may be described as ‘Evolving’, where the fundamental trend has strong, conflicting elements of both positive and negative. Rating Watches are designated as ‘Evolving’, if ratings may be raised, lowered or affirmed. However, ratings can be raised or lowered without being placed on Rating Watch first.

On August 30, finance minister Nirmala Sitharaman announced a major consolidation in the country’s banking sector that would see ten public sector banks being merged into four big entities. The proposed merger of Kolkata-headquartered Allahabad Bank and Chennai-based Indian Bank will make the entity the seventh largest bank in India. With Indian Bank as the anchor bank, the merged entity’s total business would be worth Rs 8.08 lakh crore.

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