"...lowered foreign currency issuer credit rating on India-based IDBI Bank to 'BB+/B' from 'BBB-/A-3'. The outlook on the long-term rating is negative," S&P said in a release.
Standard & Poor's Ratings Services bases its rating on IDBI on the bank's 'adequate' business position, 'moderate' capital and earnings, 'moderate risk position, 'average' funding, and 'adequate' liquidity, it said.
"We downgraded IDBI because we expect the bank's asset quality to remain weak over the next 12-18 months," said Standard & Poor's credit analyst Amit Pandey.
S&P further said: "We also lowered the issue ratings on the bank's senior debt to 'BB+' from 'BBB-', subordinated debt to 'BB-' from 'BB+', and junior subordinated debt to 'B' from 'B+'.
S&P said that it expects IDBI's credit costs to remain high and the non-performing loans in its large infrastructure loan book could rise given the current tough economic conditions in India.
"In our view, this could lead to higher average credit costs. Moreover, IDBI's loan book is fairly concentrated in terms of single-name exposure."
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