Brickwork Ratings assigns BWR A (SO) for Andhra Pradesh State Financial Corporation's NCD issue

Brickwork Ratings has assigned the Provisional Rating "BWR A (SO)" for Andhra Pradesh State Financial Corporation's proposed Non Convertible Debentures (NCD) issue of Rs.300 crores (INR Three Hundred Crores only) and reaffirms "BWR FA+" for Andhra Pradesh State Financial Corporation's Fixed Deposit Programme upto Rs.180 crore.

"BWR A (SO)" rating stands for an instrument that is considered to have ADEQUATE degree of safety regarding timely servicing of financial obligations. Such instruments carry low credit risk. The rating is provisional and subject to sharing of final term sheet.

"BWR FA+" rating for fixed deposits stands for an instrument that is considered to offer ADEQUATE degree of safety in terms of timely servicing of interest and principal. (Brickwork Ratings application for registration with RBI in this regard is pending with them).

A "Stable" rating outlook signifies the expectation of the rating being stable in the near term. The rating has been reaffirmed taking into account the financial performance of the APSFC, publicly available information and clarifications provided by them and the Corporation's track record of meeting all the obligations under the Fixed Deposits programme promptly.

The rating, inter alia, factors Government of Andhra Pradesh ownership and the continued support enjoyed by the APSFC from the State Government, diversified loan portfolio, growth in sanctions and disbursements of loans and capital adequacy. The rating has also factored the Corporation's increasing NPA's and pressurized NIM margin.

APSFC's sanctioned loans grew from Rs. 1052 crores in FY10 to Rs. 1386 crores in FY11, registering a growth of 31.74%, while disbursements have grown from Rs. 708 crores in FY10 to Rs. 904 crores in FY11 registering a growth of 27.73%. For six months ended September 30, 2011 sanctions and disbursements were Rs. 566 crores and Rs. 358 crores respectively.

Source : Equity Bulls

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