OREANDA-NEWS. S&P Global Ratings today assigned its 'B+' long-term issue rating to the additional Tier 1 notes and 'BB' long-term issue rating to the Tier 2 notes under the US$10 billion medium-term notes (MTN) program by State Bank of India (SBI: BBB-/Stable/A-3). The issue ratings are subject to our review of the final issuance documentation.

The rating on the additional Tier 1 notes is four notches lower than SBI's stand-alone credit profile (SACP) of 'bbb-' and reflects:One notch for subordination risk;Two notches because we expect the notes to have Tier 1 regulatory capital status and full discretion to cancel interest;One notch because the notes contain a contractual write-down clause; a write-down would occur at point of non-viability. A write-down may also happen if the bank's common equity Tier 1 ratio falls below 5.5% at any time before March 31, 2019, or below 6.125% from that date on, which we view as a non-viability trigger. Once the notes have been issued and are confirmed as part of SBI's Tier 1 capital, we expect to assess them as having intermediate equity content under our criteria. This reflects our view that the notes can absorb losses on a going-concern basis through discretionary coupon cancellation, are perpetual, and have no coupon step-up.

The rating on the Tier 2 notes is two notches lower than SBI's SACP and reflects:One notch for subordination risk; andOne notch because the notes contain a contractual write-down clause; a write-down would occur at the point of non-viability. Tier 2 notes are not likely to absorb losses on a going-concern basis and therefore we do not expect to assess them as having equity content.