Moody's ups ratings of SBI, HDFC Bank, EXIM India and IRFC

Stocks of firms like HPCL, IOC, ONGC, GAIL and NTPC rallied as these firms were amongst those which got an issuers and ratings upgrade.

"The decision to upgrade the ratings is underpinned by Moody's expectation that continued progress on economic and institutional reforms will, over time, enhance India's high growth potential and its large and stable financing base for government debt, and will likely contribute to a gradual decline in the general government debt burden over the medium term", it said.

Moody's upgrade, its first since January 2004, moves India's rating to the second lowest level of investment grade.

While India's high debt burden remains a constraint on the country's credit profile, Moody's said that the reforms put in place have reduced the risk of a sharp increase in debt. "It clearly shows that the economy is turning the corner and poised for a big leap forward, highlighting the vast potential that India offers as a global investment destination".

Meanwhile, Congress communications in-charge Randeep Surjewala sought to downplay the rating upgrade, saying the same agency had miscalculated USA subprime mortgages before the economic meltdown.

Moody's Investors Service on Friday upped the long-term ratings of four Indian financial institutions including SBI and HDFC Bank by a notch to Baa2 following the upgrade of the country's sovereign rating to the same level. "In fact, always the question was why the rating upgrade wasn't happening", said Mr Kumar.

The reforms will complement the existing shock-absorbance capacity provided by India's strong growth potential and improving global competitiveness, Moody's said. "Moody's mood changes to upgrade India rating".

Even if recent economic reforms have seen near-term negative growth impacts, there have been some benefits. "Took more than a decade but is a big positive development for the Indian economy", he said in a tweet. Earlier, the outlook was positive but on a lower rating, which indicated there were more chances of an upgrade than downgrade.

However, there were some experts that differed.

Moody's Corporation, also known as Moody's, is a 108 year old financial services company from United States of America, which provides credit rating for countries based on their economic growth.

"Markets should worry that the government now having received the ratings upgrade, may actually slacken and relax its commitment to reducing fiscal deficit, as per the stated plan - especially, at a time when investors seem to be worrying about the same as reflected in the increase in bond yields of more than 50 bps since August 2017,"said Mr Chari".

A sovereign ratings upgrade of the Indian government's bonds and of some domestic industry majors from U.S. credit rating agency Moody's on Friday lifted the key Indian equity indices to their new intra-day record highs.

  • Rogelio Becker