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Moody’s Investors Service has assigned a (P)Baa3 senior unsecured rating to the $1-billion medium-term note (MTN) programme of state-owned Power Finance Corporation, the agency said. It has also assigned a Baa3 foreign currency senior unsecured rating to the draw-down on the programme based on the draft documents. In its rating rationale, the agency said PFC’s ratings could be upgraded if there is a material improvement in the company’s financial metrics, including its asset quality and liquidity profile, as well as in the operating environment of the power sector. However, the ratings could face negative pressure if the financial strength of state-run power utilities deteriorates significantly or the company’s asset-liability mismatch deteriorates or the asset quality problems in PFC’s advances to the private sector exacerbate.
Any indication of changes in PFC’s exclusive focus on financing the power sector, which could imply a reduced policy role, could also impact the rating.
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