S&P lowers ratings on GIC, corporates

By Our Special Correspondent

MUMBAI, AUG. 8. Standard and Poor's today downgraded the public information (PI) ratings of General Insurance Corporation (GIC) and its four subsidiaries following its downgrading of India's sovereign rating on Tuesday. S&P's has also revised the foreign currency rating outlook on several corporate and infrastructure entities too from stable to negative.

The corporate whose rating outlook has downgraded are Reliance Industries, Indian Oil Corporation, Tata Power, Larsen and Toubro, National Thermal Power Corporation, Power Finance Corporation and Indian Railway Finance Corporation. The credit rating of Tata Engineering and Locomotive Company is still on credit watch with negative implications, the agency said today. The rating of all the entities is currently `BB'.

The ratings of GIC and its subsidiaries, New India Assurance Co., Oriental Insurance Co., National Insurance Co. and United India Insurance Co have been downgraded to `BBB- (PI)' from `BBB (PI).

S&P's stated that the rating action follows the downgrade of the long-term sovereign credit rating on the country to `BBB-' from `BBB'. The agency has reaffirmed the `BB' long-term and `B' short-term foreign currency rating but revised the outlook to negative from stable.

S&P's further stated that the actions reflect the unchecked budget deficits and rising domestic indebtedness. The general Government debt could approach 70 per cent of the GDP or 400 per cent of the revenues - higher than in most similarly rated countries. The outlook revision reflects rising concern that public finances may worsen further in the years to come as vested interests continue to thwart public sector reform.

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Section  : Business
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