The Hindu Business Line : S&P upgrades Infosys, Tata Steel foreign currency ratings

STANDARD & Poor's Ratings Services today said that it has raised the foreign currency ratings on Infosys Technologies Ltd and Tata Steel Ltd to a level higher than the country's sovereign rating.

Infosys Technologies Ltd has been moved up from BBB-/Stable to BBB/Stable and Tata Steel Ltd to BBB/Stable from BB+/Stable. India's rating stands at BB+/Stable.

"This announcement is an important milestone and reflects Tata Steel's competitive position in the industry,'' Tata Steel said quoting its Managing Director, Mr B. Muthuraman. This will enable the company access global funds, it said.

Tata Steel and Infosys are among the 10 non-sovereign credit ratings that S&P had raised. It has increased the foreign currency ratings on eight companies and two financial institutions in India, Indonesia, the Philippines and Thailand, following a review of transfer and convertibility risk in these markets.

"As sovereigns under political and economic stress are considered less likely to restrict non-sovereign entities' access to the foreign exchange needed to service debt, Standard & Poor's has increased the foreign currency ratings on eight companies and two financial institutions.

"This means that certain non-sovereign entities that are considered well insulated from direct and indirect sovereign risks may achieve a foreign currency rating that exceeds the sovereign foreign currency rating. These entities will tend to be those that demonstrate moderate leverage, strong free cash flow generation and competitive business portfolios. Other factors taken into consideration include strong offshore parent support, geographical diversity of operations and structural support features," an official statement said.

According to it, the non-sovereign companies whose ratings have been raised based on the revised criteria were Infosys Technologies, Tata Steel, PT Hanjaya Mandala Sampoerna Tbk, PT Bank Mandiri, PT Bank Danamon Indonesia Tbk, Globe Telecom Inc, Universal Robina Corp, Philippine Long Distance Telephone Co, San Miguel Corp and Advanced Info Service Public Co Ltd.

In March, Moody's Investor Services had positioned Tata Steel on a par with steel majors, Arcelor and Thyssen Krupp, by assigning a `Baa2' rating with stable outlook.

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