After Crisil, Now Moody Will Rate Punjab National Bank
Moody’s Investors Service has placed Punjab National Bank under review for downgrade, after Crisil. It was known from reliable source that the agency has a Baa3/P-3 rating on PNB. This was when it has a Baa3 rating on its foreign currency issuer rating. Now, with a stable outlook, bank overall has a Baa2 rating from Moody’s.
The bank is needed to provide at least a substantial portion of the exposure now. Thus, as a consequence, the bank’s profitability will likely come under pressure, although the actual impact will depend on the timing and quantum of provisions that need to be made, as well as any prospects for recovery.
Earlier, on Sunday, Crisil Ratings had put PNB’s viability rating of ‘BB’ on rating on a “negative watch”. PNB’s various debt instruments are on “AAA” and “AA” at present.
Moody’s has also placed the Delhi-based lender’s Baseline Credit Assessment (BCA) and adjusted BCA of Ba3 and the Counterparty Risk Assessment (CRA) of Baa3(cr)/P-3(cr) under review for downgrade.
Moody’s assumes a very high probability of government support for PNB in times of need, resulting in a three-notch uplift to its deposit and issuer ratings from its BCA. In the review for downgrade, Moody’s will also assess government support for the bank’s deposits and senior unsecured debt, it added.