Business Daily from THE HINDU group of publications
Tuesday, Aug 07, 2007
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Business Daily from THE HINDU group of publications Tuesday, Aug 07, 2007 ePaper |
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Money & Banking
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Credit Rating Moody’s rating on rupee bonds unchanged
Our Bureau
Mumbai, Aug 6 International rating agency, Moody’s Investor Service, has retained its rating of ‘Ba2’ for India’s local currency bonds, which is two notches below investment grade. Moody’s had originally assigned this rating in view of India’s fiscal deficit, which is among the highest in the world. Incidentally, the agency has given a rating of ‘Baa3’ to India’s foreign currency rating, which is the lowest in the investment grade. “Usually there is no difference between the local and foreign currency rating. Even if there is a difference, typically foreign currency rating is lower than the domestic currency rating. But India’s case is unusual,” Mr Chetan Modi, Representative Director, Moody’s India, said. While India has high forex reserves, no foreign debt, strong GDP growth and good liquidity, the high rate of government debt is the major reason for Moody’s to continue with its rating for the domestic bonds, said Mr Modi. About the impact of the rating on investments in India, Mr Modi said: “It is hard to say what the impact on investment would be, as the rating for foreign currency is investment grade." The rating is not likely to affect the cost of borrowing to any great extent because the Indian market is not a shallow market anymore, the analyst with the foreign bank said. “Also, with the kind of foreign currency reserves we have built in, the foreign currency rating is not likely to go down,” he added. The infrastructure sector in India needs a lot of money and there are institutional investors who are willing to give local currency loans for projects, the analyst added. “Recently Asian Development Bank launched two issues in Indian rupee which were earmarked for projects in India,” he said.
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