Moody’s upgrade of India’s sovereign ratings to ‘Baa2’ from ‘Baa3’

Moody’s upgrades foreign currency issues rating of 9 PSUs

GAIL has a dominant position in the gas transmission business in India. Its transmission pipelines represented around 75% of the country’s network and the company had around 60% market share in gas marketing as of March 2017, Moody’s said.

By: FE Bureau | Mumbai | Published: November 18, 2017 5:52 AM

Moody’s Investors Service on Friday upgraded the foreign currency and bond issuer ratings of Indian infrastructure government-related issuers (GRIs) — NTPC, NHPC, NHAI and GAIL, and of public sector oil and gas companies — BPCL, HPCL, IOCL and Petronet LNG — to ‘Baa2’ from ‘Baa3’ following the upgrade of India’s sovereign ratings on November 16. The outlook has been revised to ‘stable’ from ‘positive’. “The upgrade in ratings for NTPC, NHPC, NHAI and GAIL follows the upgrade of the Indian sovereign rating and reflects the strategic importance of these entities to the country, as well as their close operational and financial links with the government,” Abhishek Tyagi, Moody’s V-P and senior analyst, said. NTPC’s current installed capacity represents 15.8% of India’s installed power generation capacity. In terms of overall power generation, NTPC contributed 23.8% in the fiscal year ended March 2017 (FY17). Similarly, NHPC is the largest hydro power generator of India and accounted for about 15% of India’s total installed hydro capacity of around 44,500 MW as of March 2017. The government’s shareholding of 74.5% in NHPC is one of the highest among other government-owned companies, the ratings agency said. NHAI’s baseline risk is closely related to the the government’s financial strength. “As a result, the baseline risk for NHAI is effectively the default risk of the Indian government. Accordingly, NHAI’s rating further reflects Moody’s expectation that financial support from the government will continue to ensure the authority’s financial viability and operational soundness,” Tyagi adds.

GAIL has a dominant position in the gas transmission business in India. Its transmission pipelines represented around 75% of the country’s network and the company had around 60% market share in gas marketing as of March 2017, Moody’s said. As regards non-financial companies, Moody’s upgrading the foreign currency issuer ratings of BPCL, HPCL, IOCL, and Petronet LNG reflects the strategic importance of the oil marketing companies as they own and operate the majority of the the country’s fuel refining entities and most of the fuel distribution infrastructure. The foreign currency issuer rating of Oil and Natural Gas Corporation (ONGC) has been upgraded to ‘Baa1’ from ‘Baa2’. The outlook is stable. “The upgrade of the foreign currency ratings of ONGC follows the raising of the ceiling for foreign currency bonds. ONGC’s Baa1 BCA and Baa1 local currency issuer rating remain unchanged,” Vikas Halan, vice-president and senior credit officer at Moody’s, said.

The upgrade of Petronet LNG reflects the upgrade of the rating of its key counterparties, including IOCL and BPCL, which have been a constraint on its ratings. The Baa2 rating of Oil India (OIL) is already at par with its Baa2 BCA and also the upgraded rating of the government. Thus, the upgrade of the sovereign has no impact on OIL’s foreign currency issuer and bond ratings, it said.

http://www.financialexpress.com/economy/moodys-upgrades-foreign-currency-issues-rating-of-9-psus/937792/