Mumbai: Debt rating agency Standard & Poor’s on Tuesday upgraded from ‘negative’ to ‘stable’ its outlook on Indian conglomerate Reliance Industries Ltd. (RIL). The new rating comes after an expected improvement in its ”financial metrics” driven by higher gas production, refinery capacity additions and strong market conditions in the petrochemical segments. It, however, affirmed the ‘BBB’ long-term corporate credit rating on RIL and the ‘BBB’ issue rating on the company’s senior unsecured notes.
”We revised the outlook to reflect our expectation of an improvement in RIL’s financial metrics because we believe the consistent improvement in the company’s operating performance over the past year is sustainable,” said S&P’s credit analyst Suzanne Smith in a statement.
A higher rating makes it easier for a company to raise cheaper debt. S&P had given RIL a ‘negative’ outlook in January 2009 in the aftermath of the financial meltdown that eroded refining margins and fuel demand. S&P added that the improvement in financial metrics ”would be fuelled by better operating performance and a reduction in debt”. Also, RIL”s unsuccessful bid to acquire LyondellBasell Industries AF had ”allayed fears” arising out what would have been ”a partly debt-funded acquisition”, the rating agency said.