Mumbai : Share price of Axis Bank, on Monday trade, fell over 5 percent to Rs. 404.50 after S&P Global Ratings downgrades its ratings to below investment grade on increased economic risks for banks and financial institutions in India due to the Covid-19 pandemic.
On Friday, the ratings agency downgraded Axis Bank’s issuer credit rating to BB+/stable/B from BBB-/negative /A-3 earlier. When a bond’s rating drops into the double ‘B’ category, it falls into the junk bond territory .
S&P said in a statement “We lowered our ratings on Axis Bank to reflect our expectation that heightened economic risks facing India’s banking system will affect the bank’s asset quality and financial performance”
It added “While Axis’ asset quality is superior to Indian Banking sector average , its level on non performing assets (NPA) will likely remain high compared to International peers. Nevertheless, we expect the bank to maintain its strong market position and adequate capitalization”
However, on Saturday, Axis Bank filed a clarification to National Stock Exchange that S&P Global ratings inadvertently mentioned the bank on Credit watch.
The Bank in the statement asked investors to “please note that as confirmed by S&P, the rating report inadvertently mentions the bank being on Credit Watch. In this regard, S&P has confirmed that it’s an editorial error and banks is on stable outlook”
“We wish to inform you that ,the domestic debt instruments issued by the Bank continue to be rated ‘AAA/AA+’ by all four rating agencies ,i.e, CRISIL, ICRA, CARE and Indian ratings” it added .
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