Moody's ups India's rating

Tammy Harvey
November 19, 2017

Moody's Investors Service on Friday upgraded India's sovereign bond rating by a notch for the first time in 14 years, showing confidence in the Narendra Modi government's reform initiatives such as demonetisation, the goods and services tax (GST) and its efforts to resolve the bad debt asset crisis of banks.

President of industry chamber Ficci Pankaj Patel said the development underlines the fact that India is moving in the right direction.

Moody's decision to upgrade the India's sovereign ratings is based on its expectations that economic and institutional reforms pursued by the government will, over time, enhance India's high growth potential and will stabilise government debt. "We are anxious about the dark clouds today", he said.

Shah says from a flow point of you Moody's upgrades provides a a great opportunity for India because there are many pensions funds that don't invest in India because of lower rating. "Took more than a decade but is a big positive development for the Indian economy", he said in a tweet. Government officials expressed hope that other credit rating agencies such as S&P and Fitch would follow suit.

New Delhi- The ruling BJP and the government on Friday cheered United States credit ratings agency Moody's upgradation of India's sovereign ratings, with party President Amit Shah and several ministers tweeting that it was a recognition of all the good work done by the NDA. The one-level step-up from the lowest investment-grade ranking puts India in the league of the Philippines and Italy. "The cost of foreign borrowings will automatically come down, which in itself is a big benefit for the country". The upgrading by the influential American credit rating agency comes after almost 13 years, during which time India has attracted cumulative foreign direct investment flows of about $ 250 billion and net portfolio investments of over $ 225 billion into its stock and debt markets.

"We still expect policy steps to cool the risks to enable banks to cut lending rates".


"Longer term, India's growth potential is significantly higher than most other Baa-rated sovereigns", the agency said.

The benchmark BSE Sensex hit as high as 33,520.82 before paring gains to end the session up 235.98 points or 0.71 percent at 33,342.80.

Even if recent economic reforms have seen near-term negative growth impacts, there have been some benefits.

The government is mid-way through a wide-ranging programme of economic and institutional reforms, the global ratings agency said in a statement on Friday, mentioning GST, improvements to the monetary policy framework, and measures to address bad loans of banks. This upgrade puts Moody's one notch ahead of Fitch and S&P, which now has India on BBB- (stable), noted ANZ in a research report.

This is unedited, unformatted feed from the Press Trust of India wire.

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