The Maharashtra government's inability to honour guarantees to some irrigation companies has prompted the Investment Credit and Rating Agency (Icra) to downgrade the ratings assigned to the bond programmes of 10 state government corporations, including five irrigation companies, which have been assigned substantial risk grade.
Icra has also withdrawn the LA- sub-sovereign rating assigned to the Maharashtra government since the state has neither used nor intends to use the rating for raising debt.
The ratings were only used by the state government entities for raising bonds, whose ratings had been revised, it said.
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The rating agency has also assigned lower ratings to four other corporations, including the Maharashtra State Electricity Board (MSEB).
The MSEB has been downgraded to LBB structured obligation (SO) from LA- (SO), reflecting inadequate safety.
While delays in payments to bondholders of some irrigation units prompted the decision, the fact that the other four entities had received guarantees from the same guarantor