Political rumbles have no effect on Moody’s, Fitch India ratings

Political rumbles have no effect on Moody’s, Fitch India ratings
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First Published: Tue, Aug 21 2007. 12 26 PM IST
Updated: Tue, Aug 21 2007. 12 26 PM IST
Mumbai: Credit rating agency Moody’s Investors Service said on Tuesday while it did not underestimate the seriousness of India’s political crisis over a nuclear energy deal, its current ratings factored in occasional troubles.
Differences between the government and the Left allies came to a head last weekend, and the leftist parties virtually threatened to withdraw support to the ruling coalition headed by the Congress party.
“In the worst case, if this government falls, it would not be the first time such a thing would have happened for a given level of the sovereign rating and outlook,” Aninda Mitra, a senior analyst at Moody’s, said in an e-mail to Reuters.
“While we do not underestimate the seriousness of this brewing (potential) crisis, such brinkmanship is to be expected occasionally and is factored into the rating,” Mitra said.
India has an investment-grade Baa3 foreign currency rating from Moody’s. The domestic currency rating is Ba2, which is two notches below the foreign currency rating.
The domestic currency rating is speculative grade due to heavy public debt constraints. The ratings outlook is stable.
The other rating agency Fitch, also was gung-ho on India.
India’s debt rating won’t be affected by Prime Minister Manmohan Singh’s government’s weakening ties with coalition allies, said James McCormack, head of Asian sovereign ratings at Fitch Ratings.
Fitch in August last year raised India’s rating by one level to BBB-, the lowest investment grade level.
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First Published: Tue, Aug 21 2007. 12 26 PM IST
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