Axis Bank Upgraded to IG Status of BBB-; Perps Trend Higher

Indian lender Axis Bank was upgraded to BBB- from BB+ by S&P, bumping the bank up to investment grade status. The upgrade came on the back of Axis’s “good asset quality” and expectations that it will be maintained over the next 1-2 years. Asset quality is expected to stay better than the Indian banking sector average and comparable to that of similar rated international peers, S&P said. NPLs and standard restructured loans could fall to 2.5-3.0% of total customer loans by March 2023 and credit costs are likely to stay below 1%. S&P adds that Axis can absorb the impact of higher inflation and interest rates. The rating agency said that the lender’s provisioning, capital buffers and tighter risk management can help it absorb a moderate rise in credit stress and support credit quality.

Axis’s $600mn 4.1% Perp callable in August 2026 has been trending higher over the last two weeks having rallied by 8%.