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TEXT-Fitch asgnd APSFC series V bonds final 'Fitch A(SO)(ind)'
(The following statement was released by the rating agency)
July 31 - Fitch Ratings has assigned Andhra Pradesh State Financial Corporation's (APSFC) INR2bn Series V - 2012 bond issuance a final rating of 'Fitch A(SO)(ind)' following a review of the transaction documents subsequent to the closure of the issue.
Fitch also affirmed the ratings on APSFC's other bonds and bank loans as follows:
Series I - 2007 INR0.50bn affirmed at 'Fitch A(SO)(ind)'
Series II - 2008 INR1.29bn affirmed at 'Fitch A(SO)(ind)'
Series III - 2008 INR1bn affirmed at 'Fitch A(SO)(ind)'
Series IV - 2009 INR1.21bn affirmed at 'Fitch A(SO)(ind)'
INR500m term loans affirmed at 'Fitch BBB+(ind)'
INR250m secured overdraft facility affirmed at 'Fitch BBB+(ind)'
The bond ratings are driven by the credit quality of the government of Andhra Pradesh (GoAP, the guarantor), which has extended an unconditional and irrevocable guarantee for the payment of bond obligations throughout the bond term. The bank loan ratings are governed by APSFC's strong links to the state government apparatus.
The ratings on all issues (Series I to V) reflect their strong payment mechanism characteristics, which include a no-lien escrow bank account with IDBI Bank ('Fitch AA+(ind)/'Stable), monitored by the trustee, for debt servicing.
Negative rating action may result from deterioration in GoAP's credit quality, a weakening of linkages between GoAP and APSFC, and an erosion of latter's financial health.
APSFC was established in 1956 as a term lending institution to promote small- and medium-scale enterprises in AP under the State Finance Corporation Act 1951.
For a detailed rating rationale, please see the rating action commentary, "Fitch Affirms Andhra Pradesh State Financial Corp's Loans and Bonds", dated 29 June 2012 and available at www.fitchratings.com.
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