Moody’s Investors Service (“Moody’s”) has taken a number of rating actions on Indian non-financial corporates, following its earlier announcement that it has changed the outlook on India’s Baa2 sovereign rating to negative from stable.
As a result of the sovereign rating action, Moody’s has changed the outlook on the ratings of the following companies:
Bharat Petroleum Corporation Limited (BPCL): Affirmed Baa2 foreign currency issuer and senior unsecured debt ratings and revised outlook to negative from stable. Also affirmed the (P)Baa2 foreign currency senior unsecured rating on the MTN program. The ba1 baseline credit assessment (BCA) is affirmed.
Hindustan Petroleum Corporation Ltd. (HPCL): Affirmed Baa2 foreign currency issuer and senior unsecured debt rating and revised outlook to negative from stable.
Indian Oil Corporation Ltd (IOCL): Affirmed Baa2 foreign currency issuer and senior unsecured debt ratings and revised outlook to negative from stable. The ba1 BCA is affirmed.
Oil and Natural Gas Corporation Ltd. (ONGC): Affirmed Baa1 local and foreign currency issuer rating; revised outlook to negative from stable. Also affirmed the (P)Baa1 foreign and local senior unsecured ratings on the MTN program. The baa1 BCA is affirmed.
Oil India Limited (OIL): Affirmed Baa2 local and foreign currency issuer and foreign currency senior unsecured debt ratings; revised outlook to negative from stable. The baa3 BCA is affirmed.
Petronet LNG Limited (PLL): Affirmed Baa2 foreign currency issuer rating; revised outlook to negative from stable.
Infosys Limited (Infosys): Affirmed A3 local currency issuer rating and revised outlook to negative from stable.
Tata Consultancy Services Limited (TCS): Affirmed A3 local currency issuer rating and revised outlook to negative from stable.
A full list of affected ratings is provided towards the end of this press release.
Uncle Sam isn’t in danger of losing his top credit rating, but he’s not in the greatest shape, either.
So says Moody’s Investors Service in its quarterly assessment of triple-A-rated countries.
Paying the interest on their debt remains manageable for these countries, Moody’s says, so their governments aren’t in any immediate danger of a downgrade.
But among the AAA countries, the U.S. and the U.K. are “most stretched” by their debt obligations, Moody’s says.
The debt ratings are important because a downgrade raises a country’s borrowing costs. And virtually every big country faces a difficult challenge in removing bailout and stimulus money quickly enough to avoid inflation and slowly enough to keep the weak recovery going.
“This exposes governments to substantial execution risk in the implementation of their exit strategies, which could yet make their credit more vulnerable,” says Arnaud Mares, senior vice president in Moody’s sovereign risk group and the main author of the report.
To anyone who doubted that the gloves are now fully off between France and Britain, we bring you exhibit A: Speaking in an interview with local newspaper Le Telegramme de Brest to be published later on Thursday, Bank of France head and ECB member Christian Noyer saidthat a downgrade of France’s AAA credit rating would not be justified and ratings agencies are making decisions based more on politics than economics and questioned whether the use of ratings agencies to guide investors was still valid. “In the arguments they (ratings agencies) present, there are more political arguments than economic ones,” said Noyer, the head of the Bank of France and a member of the ECB’s governing council. “The downgrade does not appear to me to be justified when considering economic fundamentals,” Noyer said. “Otherwise, they should start by downgrading Britain which has more deficits, as much debt, more inflation, less growth than us and where credit is slumping.” The bolded sentence confirms two things: i) that the Nash equilibrium in Europe is now fatally broken, because when you have the head of one central bank doing all he can to throw another central bank under the bus, that’s pretty much game (theory) over; and ii) when he said that “the agencies have become incomprehensible and irrational. They threaten even when states have taken strong and positive decisions. One could think that the use of agencies to guide investors is no longer valid.” it proves that this amateur has no more understanding of basic finance than your generic Reuters blogger, both of whom apparently fail to comprehend that there are several hundred thousand bond and loan indentures in the real world, not the world of “S&P has no credibility so ignore it”, which are loaded with covenants discussing springing liens, rating indexed interest levels and collateral thresholds, all of which are based on a sovereign and corporate rating, and all come into play in a completely unpredictable way (hint AIG – the reason why AIG imploded was because a rating agency downgrade unleashed a terminal margin call) when there is a rating downgrade. Such as that of France in a few hours to days top. Continue reading »
Fitch Ratings-London-03 June 2010: Fitch Ratings has today downgraded BP plc’s (BP) Long-term Issuer Default Rating (IDR) and senior unsecured rating to ‘AA’ from ‘AA+’, respectively, and placed the ratings on Rating Watch Negative (RWN). At the same time, Fitch has affirmed BP’s Short-term IDR at ‘F1+’. The ratings of BP Capital Markets plc’s senior unsecured issues, which are fully and unconditionally guaranteed by BP, have been downgraded to ‘AA’ from ‘AA+’ and placed on RWN. BP Capital Markets is BP’s wholly-owned indirect subsidiary.
The downgrade of BP’s ratings reflects Fitch’s opinion that risks to both BP’s business and financial profile continue to increase following the Deepwater Horizon accident in the US Gulf of Mexico. The company has so far repeatedly failed to stop the resultant oil leak and has instead reverted to containment methods that are yet to be fully implemented and are subject to potential weather related disruption. Fitch notes that the drilling of relief wells also poses risks and additional time may be required for them to be fully effective. An additional factor supporting the downgrade is the 1 June 2010 announcement by US Attorney General, Eric Holder, that both a criminal and civil investigation has opened with respect to the oil spill that could have potential negative implications for BP’s financial profile. Continue reading »