Moody’s stabilizes India’s outlook, confirms ratings
Rating agency Moody’s on Tuesday reaffirmed India’s sovereign rating and downgraded the country’s outlook from ‘negative’ to ‘stable’, citing the risk of deterioration in the economy and financial system. Moody’s has a sovereign rating of ‘Baa3’ – the lowest investment grade, just a notch above junk status.
“Moody’s Investors Service today changed the Government of India’s rating outlook from negative to stable and reaffirmed the country’s foreign-currency and local-currency long-term issuer ratings and local-currency senior unsecured ratings to Baa3.” a statement.
The decision to change the outlook to stable reflects Moody’s’ view that downside risks are being mitigated by negative feedback between the real economy and the financial system.
“With a higher capital cushion and greater liquidity, banks and non-bank financial institutions pose far less exposure to sovereigns than Moody’s previously estimated.
“And while the risks posed by a high debt burden and weak credit affordability remain, Moody’s expects the economic environment to allow the general government’s fiscal deficit to gradually reduce over the next few years, thereby further improving the sovereign credit profile.” The fall can be stopped.” added this.
Moody’s Investors Service last year downgraded India’s sovereign rating from ‘Baa2’ to ‘Baa3’, saying there would be challenges in the implementation of policies to mitigate the risks of a sustained period of low growth and a deteriorating fiscal situation.
The outlook on the rating has been kept negative.
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