Singapore: Moody's Investors Service has taken a number of rating actions on Indian infrastructure government-related issuers (GRIs), following the earlier announcement that it had upgraded of India's sovereign rating to Baa2 stable from Baa3 positive on 16 November 2017.
As a result of the sovereign rating action, Moody's has upgraded the ratings of the following GRIs companies:
NTPC Limited (NTPC): Upgraded issuer rating to Baa2 from Baa3 and revised outlook to stable from positive. The baa3 BCA remains unchanged. At the same time, Moody's has also upgraded the rating on the senior unsecured
MTN programme of NTPC to (P) Baa2 from (P) Baa3. NHPC Limited (NHPC): Upgraded issuer rating to Baa2 from Baa3 and revised outlook to stable from positive. The baa3 BCA remains unchanged.
National Highways Authority of India (NHAI): Upgraded issuer rating to Baa2 from Baa3 and revised outlook to stable from positive.
Gail (India) Limited (GAIL): Upgraded issuer ratings to Baa2 from Baa3 and revised outlook to stable from positive. The baa3 BCA remains unchanged. The upgrade in the ratings for NTPC, NHPC, NHAI and GAIL follows the upgrade in sovereign rating from Baa3 to Baa2.
"The upgrade in ratings for NTPC, NHPC, NHAI and GAIL follows the upgrade of the Indian sovereign rating and reflects the strategic importance of these entities to the country, as well as their close operational and financial links with the government," says Abhishek Tyagi, a Moody's Vice President and Senior Analyst.
NTPC's current installed capacity represents 15.8% of India's installed power generation capacity. In terms of overall power generation, NTPC contributed 23.8% in the fiscal year ended March 2017 (FY2017).
NHPC is the largest hydro power generator of India and has long track record of development of hydro power projects. NHPC accounted for about 15.0% of India's total installed hydro capacity of around 44.5GW as of March 2017. The government's shareholding of 74.5% in NHPC is one of the highest among other government-owned companies.
The baseline risk of NHAI is closely related to the Indian's Government's financial strength. As a result, the baseline risk for NHAI is effectively the default risk of the Indian Government. This strong link to the Indian Government also considers the National Highways Authority of India Act that mandates the Indian government's funding commitments for NHAI.
"Accordingly, NHAI's rating further reflects Moody's expectation that financial support from the government will continue to ensure NHAI's financial viability and operational soundness," Tyagi adds.
Such expectations are underscored by NHAI's special legal status as a government-contributed entity i.e. entity with no shareholding equity, which is dependent on government funding for its operations.
GAIL has a dominant position in the gas transmission business in India. GAIL's transmission pipelines represented around 75% of country's network and the company had around 60% market share in gas marketing as of March 2017.
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