Credit standing company Moody’s has downgraded the scores outlook for prime oil PSUs — Indian Oil Company Restricted (IOCL), Hindustan Petroleum Company Restricted (HPCL), Bharat Petroleum Company Restricted (BPCL), Oil and Pure Fuel Company Ltd. (ONGC), Oil India Restricted (OIL) and Petronet LNG Restricted (PLL) — in addition to IT majors Infosys and Tata Consultancy Companies to ‘negative’ from ‘stable’. This, after it modified the outlook on India’s Baa2 sovereign score to adverse from steady.
“Ratings of IOCL, BPCL and OIL incorporate our expectation of support from the Indian government. Therefore, a downgrade of the rating of the sovereign to Baa3 from Baa2 will result in downgrade of the respective Baa2 ratings of these companies,” Vikas Halan, a Moody’s senior vice-president stated.
BPCL Director-Finance N. Vijayagopal advised The Hindu, “This may lead to a marginal increase in our borrowing costs from the global markets. We are not planning to raise any funds from international markets soon.”
“Although the Baa1 rating of ONGC does not incorporate any uplift because of support from the Indian government, it is constrained at no higher than one notch above the sovereign rating. Therefore, a downgrade of the sovereign rating will also result in downgrade of the rating of ONGC. Further, the rating of HPCL, which also incorporates expectation of support from the Government of India, through ONGC, will also be downgraded if we downgrade the rating of ONGC and the sovereign,” stated Mr. Halan, lead analyst for Indian oil and gasoline companies at Moody’s.
In line with Kaustubh Chaubal, Moody’s Vice President — Senior Credit score Officer, “Ratings for Infosys and TCS are constrained to no more than two notches above the sovereign rating. Therefore a sovereign rating downgrade will also result in downgrade of the A3 ratings of Infosys and TCS.”
SBI, HDFC Financial institution
Moody’s additionally revised the score outlook for six monetary establishments, together with State Financial institution of India and HDFC Financial institution following the change in outlook of the sovereign scores. EXIM India, HUDCO, IRFC and Hero Fincorp are the opposite 4 monetary establishments which additionally noticed change in outlook to ‘negative’.
The score outlooks for Financial institution of India, Canara Financial institution, Oriental Financial institution of Commerce, Syndicate Financial institution and Union Financial institution of India had been maintained ‘at stable’.