Moody’s downgrades Indian companies and banks to ‘negative’

Last updated on February 14th, 2023 at 11:01 am

11 banks and 11 corporates in India have received downgraded ratings by global credit ratings agency Moody’s Investors Services. This was done a day after Moody’s downgraded India’s sovereign ratings from Baa2 to Baa3 on June 1, with outlook being retained as negative.

The 11 banks that have been downgraded include long term and foreign currency deposit ratings of State Bank of India and HDFC Bank from Baa2 to Baa3. Also EXIM India’s long term issuer ratings were downgraded from Baa2 to Baa3.

The Baseline Credit Assessment (BCA) of HDFC Bank is now at Baa3 from Baa2. Moody’s expects the asset quality and profitability of SBI to weaken, thereby damaging its capitalization. Punjab National Bank was at Ba1 rating with BCA at b1.

Oil companies receive ‘negative’ ratings

Major Indian companies have also received downgraded Moody’s ratings. These companies include Oil and Natural Gas Corporation Ltd. (ONGC), Hindustan Petroleum Corporation Ltd. (HPCL), Oil India Ltd. (OIL), Indian Oil Corporation Ltd. (IOCL), Petronet LNG Ltd. (PLL), Bharat Petroleum Corporation Limited (BPCL), Tata Consultancy Services Limited (TCS) and Infosys Limited. All these corporations were downgraded to ‘negative’ in Moody’s ratings released on Tuesday.

Reliance Industries Limited (RIL) went to negative from stable as per Moody’s long term issuer ratings.

Infrastructure firms also receive a blow

Seven leading infra firms also downgraded by one notch. These include National Thermal Power Ltd., NHPC Ltd., National Highways Authority of India, GAIL India Ltd, Adani Green Energy and Power Grid Corporation of India Ltd.

India not alone: Over 30 countries receive downgraded ratings by Moody’s

India along with 30 nations received a knockout of downgraded ratings by Moody’s. The main reason of this being the slashed economies due to COVID-19 pandemic across the globe.

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Economists reveal that emerging markets are always more susceptible to the downgraded ratings.

With India being downgraded by a notch to Baa3, Hong Kong was downgraded to Aa3, South Africa to Ba1, Mexico Baa1.

As Moody’s ratings for India were downgraded for the first time in two decades, SBI says that it was not unexpected. The downgraded ratings along with negative outlook is on the pretext of prolonged slow growth period, rising debt, and stress on financial system as aftermath of COVID-19 pandemic.