The Hindu Business Line : `Cost of borrowing will come down'

THE Finance Ministry has welcomed the upgrade of India's long-term foreign currency rating by Moody's and Fitch, stating that it would bring down the borrowing costs of companies here.

"It is a good thing and consistent with what we have been maintaining about the economy's performance. The upgrade by these two leading global credit rating agencies will definitely help in lowering the borrowing costs of our companies," said Dr Ashok Lahiri, Chief Economic Advisor to the Finance Ministry.

Officials said that the timing of the upgrade from `speculative' to `investment' grade was significant. This is because only on Monday the Finance Ministry had liberalised norms for companies to access external commercial borrowings (ECBs) by placing borrowings up to $500 million (about Rs 2267.5 crore) for maturity of above five years under the automatic route and also removing end-use restrictions on the monies raised.

"The upgrade by the global rating agencies will now create a better demand for Indian corporate papers amongst investors, which will complement the supply-side easing on account of the Government's liberalisation of ECB guidelines," the officials added.

All this will create an enabling environment for large-scale mobilisation of ECB funds, which together with a primary market boom in the days ahead, will provide the necessary funds for corporates to undertake investments in greenfield and brownfield projects.

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