Press Trust of India , 26
Apr 2012 | 11:34 AM
http://profit.ndtv.com/News/Article/s-p-india-view-21-companies-outlook-downgraded-to-negative-302852
http://profit.ndtv.com/News/Article/s-p-india-view-21-companies-outlook-downgraded-to-negative-302852
Standard & Poor's
downgraded the rating outlook of as many as 21 entities spanning across top
banks, software exporters and public sector undertakings following the agency's
revision of country's sovereign outlook.
State Bank of
India, ICICI Bank, HDFC, NTPC, SAIL, TCS, Infosys, Wipro and IIFCL are among
the companies whose rating outlook has been slashed to negative from
stable by S&P.
The global rating
agency's move reflects the "outlook on the sovereign credit rating on India ",
which too has been lowered to negative, citing slow fiscal progress and
deteriorating economic indicators.
S&P has
also revised downwards the rating outlook of Export-Import Bank of India,
Indian Railway Finance Corp, Power Finance Corp, NHPC, Axis Bank, Bank of
India, IDBI Bank, Indian Overseas Bank, Indian Bank, Syndicate Bank, Union Bank
of India and IDFC.
"We have
equalised the ratings and outlooks on India EXIM, IIFCL, and IRFC with the
sovereign rating and outlook.
This reflects the
entities' integral linkages with, and their critical roles to, the Government
of India," S&P said. According to the agency, outlook rating of
NTPC, NHPC and SAIL, are highly influenced by the sovereign rating given
the entities' sensitivity to government intervention in the event of
financial distress.
S&P has
also affirmed the 'BBB-' long- term issuer credit ratings of all the 21
entities. Regarding banks, the agency cautioned that their rating could also be
lowered if similar steps are taken for sovereign
rating.
rating.
Experts also said
that S&P's move would not significantly impact the cost of resource
mobilisation of the Indian banks since they raise bulk of the money from
the domestic sources.
Lowering the
rating outlook of the top three software exporters -- TCS, Infosys and Wipro --
the agency said it "reflect our 'BBB+' transfer and convertibility
(T&C) assessment of India .
"We could
lower the ratings on these companies if we revise downward our T&C
assessment. We could lower our T&C assessment if we downgrade
sovereign credit rating".
S&P has
also warned of downgrading India 's
rating in two years if there is no improvement in the fiscal situation
and the political climate continues to worsen.
"The rating
outlook of the government-owned institutions cannot be higher than the
sovereign rating. So accordingly, our rating outlook has been
revised," IIFCL Chairman and Managing Director S K Goel said.
IIFCL get funding from multi-lateral institutions. So, rating revision has no impact on the company, he said.
IIFCL get funding from multi-lateral institutions. So, rating revision has no impact on the company, he said.
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