State-run Oil and Natural Gas Corporation Ltd (ONGC) and its subsidiary ONGC Videsh have witnessed a ratings downgrade with a negative outlook, courtesy a similar Indian sovereign rating.
Fitch Ratings has assigned 'BBB-' rating on ONGC's Long-Term Foreign-Currency Issuer Default Rating (IDR) and US dollar senior unsecured notes and on the foreign-currency guaranteed notes issued by ONGC Videsh, ONGC Videsh Vankorneft Pte Ltd, along with the medium-term note programme co-issued by the three entities.
"ONGC's ratings are constrained by the ratings of the state of India (BBB-/Negative), its majority owner, according to Fitch's Government-Related Entities Rating Criteria, and the Negative Outlook reflects that of the Indian sovereign," Fitch said in a statement.
Fitch had assessed ONGC's Standalone Credit Profile (SCP) at 'bbb+', reflecting its scale as the largest oil and gas (O&G) producer in India, significant reserves and production and a diversified business model comparable with that of peers rated in the 'A' category by Fitch, counterbalanced by a moderate financial profile.
It said that ONGC's status, ownership and control by the sovereign is "strong" due to the state's majority ownership and board appointments.
ONGC has not received any tangible financial support recently given its strong Standalone Credit Profile (SCP), the ratings agency noted.
"However, we expect it to receive support, if needed, due to its importance for India's energy security as the largest national upstream company and third-largest refiner and marketer of petroleum products. It has also received indirect state support for its overseas upstream acquisitions," it said.
It noted that the outlook is negative and positive rating action cannot be expected. The outlook will be revised to stable if the sovereign's outlook is revised to stable, Fitch added.
(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)
Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.
As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.
Support quality journalism and subscribe to Business Standard.