Fitch Ratings affirms EXIM Bank’s rating, outlook remains stable

  • The agency said EXIM Bank's Long-Term Issuer Default Rating is ‘BBB-’ and its Government Support Rating is ‘bbb-’, reflecting its high strategic importance to India.

Rhik Kundu
Published10 May 2024, 05:49 PM IST
EXIM Bank finances and facilitates India's international trade. Photo: Priyanka Parashar/Mint
EXIM Bank finances and facilitates India’s international trade. Photo: Priyanka Parashar/Mint

Rating agency Fitch Ratings said on Friday it has affirmed the Export-Import Bank of India's (EXIM Bank's) Long-Term Issuer Default Rating (IDR) with a stable outlook, reflecting its high strategic importance to the country. EXIM Bank finances and facilitates India's international trade. 

Fitch Ratings said it has affirmed the bank's Long-Term IDR at 'BBB-' and its Government Support Rating (GSR) at 'bbb-'.  

According to Fitch, a 'BBB' rating denotes good prospects for ongoing viability with adequate fundamentals and a low risk of needing extraordinary support to avoid default. However, adverse business or economic conditions could impair this capacity.

Also read: Mint Primer: The fallout of India's unpredictable farm trade policy

"EXIM's IDR and Outlook are at the same level as India's sovereign rating (BBB-/Stable). The IDR is driven by the GSR, which is underpinned by Fitch's view of a high probability of extraordinary state support for EXIM if needed," the agency said.

It added, "This reflects EXIM's high strategic importance to the state, which stems from its long-term policy role, its status as a policy institution, 100% state ownership and significant protection for EXIM's creditors due to access to liquidity from the authorities during periods of crisis.

"EXIM's longstanding policy role as the principal financial institution that finances and promotes India's international trade is driven by its founding act. EXIM extends lines of credit to less developed countries, underpinning its close linkages to the sovereign.

Also read: Amid global concerns over India-made drugs, government plans an exports revamp

“All of its loans are linked to foreign trade, with policy loans backed by sovereign guarantees making up nearly 51% of its loans [in the first nine months of FY24].”

The rating agency said that a positive rating action on India's sovereign rating, although unlikely, would most likely result in a similar positive change for EXIM's Long-Term IDR and GSR, assuming there are no changes in the sovereign's propensity to provide support.

"The Short-Term IDR could be upgraded to 'F2' if the Long-Term IDR is upgraded to 'BBB' or above, which we view as unlikely in the near term," it said.

Also read: India’s merchandise exports to grow by 12.3% in June quarter: Exim Bank

"EXIM's medium-term note programme and senior notes are rated at the same level as its Long-Term IDR, in line with Fitch's criteria. The notes constitute the bank's direct, un-subordinated and unsecured obligations, and rank equally with all their other unsecured and un-subordinated obligations," it added.

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First Published:10 May 2024, 05:49 PM IST
HomeNewsIndiaFitch Ratings affirms EXIM Bank’s rating, outlook remains stable

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