In wake of string of downgrades across continents, India to take steps and present country’s case for higher ratings.
A string of downgrading in sovereign credit rating across continents owing to continued global economic crisis has prompted India to initiate steps meant to get a better grasp of the pertinent methodologies and develop systematic interaction with the agencies so as to present the country’s case for higher ratings.
The moves come as a follow-up to a suggestion that was made nearly three months ago. The Financial Stability and Development Council had, in a July 27 meeting, emphasised the need for the government to strengthen its interaction with the rating agencies.
It has now been decided that the finance ministry would further broad-base the process, and present India’s case for higher rating by studying the rating agencies’ methodologies.
The ministry has, accordingly, initiated steps to strengthen interaction with the agencies.
Six international credit rating agencies issue ratings for India’s sovereign debt: Standard and Poor’s (S&P), Moody’s Investor Service, Fitch, Dominion Bond Rating Service (DBRS), Japanese Credit rating Agency and Rating and Investment Information Inc Tokyo (R&I).
S&P upgraded India’s foreign currency outlook in 2010 from negative to stable, while Fitch upgraded the local currency outlook from negative to stable. Moody’s upgraded the local currency outlook from Ba2 to Ba1. During 2011, S&P, Fitch Ratings and R&I have maintained their previous ratings and DBRS upgraded India’s long-term foreign and local currency debt for the first time from BBB (low) negative to stable outlook.
Moody’s are scheduled to visit ministry of finance on November 14, and DBRS is also expected to visit India later this year.
Fitch, while affirming their existing rating, has appreciated the management of economy by India for renewed commitment in reducing both fiscal deficit and debt. A Fitch team visited India in April this year.
DBRS had, on June 23 this year, upgraded India’s long-term foreign and local currency debt for the first time from BBB (low) negative to stable outlook.
| INDIA: IN PURSUIT OF BETTER CREDIT RATINGS | |||||
| Rating agency | Date of affirmation of rating | Foreign currency | Local currency | ||
| Ratings | Outlook | Ratings | Outlook | ||
| S&P | 5/4/2011 | BBB (LT) A-3 (ST) | Stable | No ratings given | |
| Fitch Ratings | 21-06-2011 | BBB (LT) F3 (ST) | Stable | BBB | Stable |
| DBRS | 23-06-2011 | BBB (low) (LT) | Stable (Changed from negative) | BBB (low) LT | Stable (Changed from negative) |
| Moody’s | 17-08-2010 | Baa3 | Stable | Ba1 (Upgraded from Ba2) | Positive |
| JCRA | 20-10-2010 | BBB+ | Stable | No ratings given | |
| R&I | 14-06-2011 | BBB+ (LT) a-2 (ST) | Stable | No ratings given | |
| LT (Long-term); ST (Short-term) Source: Finance Ministry | |||||
“India’s fiscal and monetary policy response to the global credit crisis helped restore the economy to a path of higher growth,” the agency pointed out. DBRS team had visited India in November last year.
