Industry & Economy
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Economy
Corporate
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Overseas Borrowings
`S&P move will impact borrowing cost for corporates'
K.R.Srivats
NEW DELHI, Sept. 20
GLOBAL rating agency Standard & Poor's decision to lower India's long-term rupee debt from investment grade to junk will impact the cost of borrowing of Indian corporates planning to tap overseas markets for debt resources, according to the President of the Indo-American Chamber of Commerce, Mr Vinod Chandiok.
"When doubts are raised on the local currency debts (rupee debts), it has an impact on the exchange parity. In this respect, it will affect the corporate sector and companies who look at overseas markets for raising debt resources," Mr Chandiok told Business Line.
At the same time, he felt that the S&P downgrade would not adversely impact the Foreign Direct Investment (FDI) flows. "Basically, this downgrade seems to have come about on account of recent debates on disinvestment which has been unnecessarily kicked off. The temporary postponement of certain decisions may have raised doubts on the seriousness of the Government to proceed with the disinvestment programme," Mr Chandiok said. He also said that it would not be appropriate to "question the opinion" of the rating agency unless one was completely aware of the parameters on which such a decision was made.
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