MUMBAI, July 29: Standard & Poor's today assigned a `BB+' rating to Industrial Credit Investment Corporation of India's (ICICI) proposed $ 150 million 144 A bond issue.

The bonds are issued under ICICI's $ 500 million medium-term note program, under which the company can issue senior unsecured, subordinated, and short-term debt. The outlook is stable, according to S&P.

The rating reflects the company's strong market franchise, sound capitalization and good profitability. ICICI's indirect government ownership and status as a public financial institution are favourable features in the company's risk profile.

``As of March 1997, the government sector held about 39 per cent of issued capital, but retained about 51 per cent of voting rights. Key sensitivities include the degree of concerntration in ICICI's business profile and funding base and a generally high risk operating environment,'' S&P release said here.

In response to financial system dergulation and increased competition, ICICI has embarked on a diversification strategy aimed at broadening its business base and income streams. ``The merger with SCICI was integral to the implementation of this strategy and ICICI's competitive position has been enhanced which has enabled it to serve a large and more diverse client base,'' it said.

ICICI's traditional business had been focussed on project finance-related leading activities, which is regarded by Standard & Poor's to be of higher risk than tradional commercial banking activities. However, this has moderated over time because of the acquisition of SCICI, new product and services offered by ICICI.

ICICI's asset quality is comparable with that of other insitutions in the Indian market. In addition, ICICI's asset qulity compares favourably with that of commercial banks. Nevertheless, problem loans, which are fully baced by tangible collaterial and loan-losses remain high by international standards, and asset quality is a key rating sensitivity, largely because of the many risks of the changing Indian operating environment.

``ICICI is soundly capitalized, with an equity-to-assets ratio of about 12.3 per cent and a risk-weighted capital ratio of about 13.2 per cent.

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