As there is a shift in India’s outlook to become stable in early October and the easing of Coronavirus (Covid-19) pandemic restrictions the Rating agency Moody has stated six Indian companies will be removed from the potential fallen angel’s list. This is due to the relaxation of Covid-19 pandemic regulations and as the economy is boosting there is a fall in assistance from the Asian companies. Potential fallen angels are referred to firms that are most at stake for relinquishing their investment-grade ratings. The six Indian entities that exited the list of potential fallen angels list are Oil and Natural Gas Corp (ONGC), Oil India Ltd (OIL), Indian Oil Corp Ltd (IOCL), Hindustan Petroleum Corp Ltd (HPCL), Petronet LNG, and UltraTech Cement. ONGC, OIL, and IOCL are government-related issuers(GRIs). All of these companies hold a “Baa3 stable” rating.
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The rating agency has improved its opinion from negative to stable. A few companies have downgraded even further. Bharat Petroleum is still on the potential fallen angel’s list whereas Hindustan Petroleum has garnered support from the government through ONGC. Cement company Ultratech is the sixth company to leave the potential fallen angels list as their ratings are capped at India’s sovereign rating.
A Moody spokesperson stated that the 12 fallen angels have an outstanding bond of $28 billion with $3.2 billion to be paid by the end of 2022. Most fallen angels retain their high-yield space which would become a likely problem as finding refinancing would become tougher. These companies would crowd lower-rated companies which would increase debt service costs. Since 2008, only two companies have made their way back to the investment grade. Moody’s spokesperson also added that these companies account for five percent of the Asian investment-grade companies which is reduced from 9.7 percent in 2020.
