S&P puts HDFC Bank, ICICI Bank Bahrain bonds under CreditWatch

New Delhi: Standard & Poor's Ratings Services has put bonds issued by HDFC Bank and ICICI Bank in Bahrain under CreditWatch following lowering of the sovereign rating of the Gulf nation.

The rating agency "placed its 'BBB-' long-term issue rating on senior unsecured bonds issued by Bahrain branch of HDFC Bank Ltd (BBB-/Stable/A-3) and ICICI Bank (BBB-/Stable/A-3) on CreditWatch with negative implications," S&P said in a statement.

These rating actions have come after S&P lowered long-term sovereign credit rating on Bahrain to 'BB/Stable'.

"The foreign currency rating on the host sovereign caps our view of the creditworthiness of the bank branches. We aim to resolve the CreditWatch status within a few weeks, or, at the latest in the next three months," it said.

The Bahrain branch of HDFC Bank has raised about USD 1.2 billion through bonds issuance while ICICI Bank has mopped up approximately USD 600 million.

Both banks have announced they are in the process of taking steps with regard to all issuances from Bahrain to address the rating action on the host country, it said.

The rating agency is studying the alternative payment structures that the banks are proposing for their effectiveness in avoiding and mitigating the sovereign risk of the Gulf nation.

"We may lower the rating by multiple notches, if in our view the new structure does not reduce the sovereign risk of the host country for HDFC and ICICI Banks' bondholders," it said.