Moody's assigns B1(hyb) Axis Bank's proposed AT1 capital securities

Moody's has assigned B1(hyb) rating to Axis Bank Limited, GIFT City Branch's proposed USD-denominated, undated, non-cumulative and subordinated Additional Tier 1 (AT1) capital securities being issued out of its global medium term note (GMTN) programme. Moody's has also assigned (P)B1 Pref. Stock Non-cumulative program rating to the AT1 capital securities component of its GMTN programme.

RATINGS RATIONALE

The B1(hyb) rating and (P)B1 program rating is three notches below Axis Bank Ltd's ba1 Baseline Credit Assessment (BCA) and Adjusted BCA, reflecting the probability of impairment associated with non-cumulative coupon suspension, as well as the likelihood of high loss severity when the bank reaches the point of nonviability.

The principal and any accrued but unpaid distribution on these capital securities would also be written down, partially or in full, if the RBI determines that without such a write-down, the bank would become non-viable, or a public sector capital injection is needed without which the bank would become nonviable. In addition, the AT1 securities will be written down in full if the RBI decides to reconstitute or amalgamate the bank with another bank, pursuant to Section 45 of the Banking Regulation Act, 1949. In both these scenarios, the write-down will be permanent.

The principal and any accrued but unpaid distributions on these capital securities would also be written down, partially or in full, if Axis Bank's common equity tier 1 (CET1) ratio is at or below 5.5% any time prior to 1 October 2021, and 6.125% from and including 1 October, 2021. In such a scenario, the write-down may be temporary, and the amount could be reinstated subject to the Reserve Bank of India's (RBI) conditions.

Furthermore, Axis Bank, as a going concern, may choose not to pay interest on these securities on a noncumulative basis. However, a common share dividend stopper applies if an interest payment is missed.

Shares of AXIS Bank Ltd. was last trading in BSE at Rs. 783.75 as compared to the previous close of Rs. 752.5. The total number of shares traded during the day was 622133 in over 18766 trades.

The stock hit an intraday high of Rs. 789.5 and intraday low of 754. The net turnover during the day was Rs. 482242197.

Source : Equity Bulls

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