{"id":64838,"date":"2018-02-19T22:54:03","date_gmt":"2018-02-19T22:54:03","guid":{"rendered":"http:\/\/www.bnreport.com\/how-rating-watch-may-affect-pnb-bonds\/"},"modified":"2018-02-19T22:54:03","modified_gmt":"2018-02-19T22:54:03","slug":"how-rating-watch-may-affect-pnb-bonds","status":"publish","type":"post","link":"https:\/\/www.bnreport.com\/en\/how-rating-watch-may-affect-pnb-bonds\/","title":{"rendered":"How \u201crating watch\u201d may affect PNB bonds"},"content":{"rendered":"

Investors are now a worried lot after India Ratings and Research<\/a> and CRISIL<\/a> placed Punjab National Bank (PNB) on a rating watch as an immediate fallout of the public lender\u2019s entanglement in the country\u2019s biggest banking fraud. <\/p>\n

A three-year paper by the lender\u2019s mortgage unit PNB Housing<\/a>, rated AA+, yields 8.12% while perpetual bonds by the bank yields 9.25-9.50%. Dealers said the average notional yields have hardened 15-20 basis points after the elaborate web of deception defrauding the lender of Rs 11,400 crore became public. Yields may rise a further 5-10 basis points when the markets open Tuesday amid the threat of a downgrade. <\/p>\n

India Ratings and Research put the debt instruments of both the lender and its subsidiary under a negative rating watch. A negative rating watch may result in either a cut in outlook or downgrade in the rating. <\/p>\n

"Any negative rating watch normally leads to rising bond yields,\u201d said Ajay Manglunia, Executive Vice President at Edelweiss Financial Services. "Investors will be hesitant to transact in the secondary market<\/a> with those securities unless they have short-term goals. Overall, such an incident may dent the risk appetite in the market.\u201d <\/p>\n

Bond and currency markets were shut on Monday due to a public holiday in Mumbai. <\/p>\n

To be sure, secondary market trading is thin in these papers. While long-term investors are unwilling to sell their holdings at a loss, some traders with short-term goals might exit. <\/p>\n

\u201cThe problem is to convince a long-term investor to buy these securities, which may continue to bleed amid uncertainties arising out of the scam,\u201d said a fund manager who did not wish to be named. \u201cWe will try to prune our securities if we find any long-term investor, even at partial losses. The rating negative watch is a cause for worry.\u201d <\/p>\n

ET reported last week that institutional investors might have to contend with mark-to-market losses on more than Rs 4,500-crore worth of PNB debt securities if the expanding scope of an ongoing probe into India\u2019s biggest banking fraud triggered a rating downgrade. <\/p>\n

\u201cThe agency will resolve the RWN (Rating Watch Negative) once there is a greater visibility about the transactions and its overall impact on the bank\u2019s operating and financial parameters, as well as the bank and government of India\u2019s (majority shareholder) response to this event,\u201d the rating company said in a release. \u201cInd-Ra will also factor in the impact (if any) on the bank\u2019s overall franchise or those of systemic importance.\u201d <\/p>\n

<\/a><\/strong> <\/a><\/p>\n

Original Article<\/a><\/p>\n

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ET Markets<\/a><\/h5>\n

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Investors are now a worried lot after India Ratings and Rese..<\/p>\n","protected":false},"author":1,"featured_media":64839,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[202],"tags":[],"class_list":["post-64838","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-finance"],"yoast_head":"\nHow \u201crating watch\u201d may affect PNB bonds - Business News Report<\/title>\n<meta name=\"description\" content=\"Investors are now a worried lot after India Ratings and Rese..\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.bnreport.com\/en\/how-rating-watch-may-affect-pnb-bonds\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"How \u201crating watch\u201d may affect PNB bonds - 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