ONGC gets Baa1 credit rating from Moody's

New Delhi: Moody's Investors Service on Tuesday affirmed state-owned ONGC's Baa1 local and foreign currency issuer ratings, saying it reflect an improvement in the firm's credit metrics because of rise in oil prices.

Oil and Natural Gas Corporation's (ONGC) consolidated credit metrics - as measured by retained cash flow (RCF) to net debt - improved to 51 per cent for the fiscal ended March 31, 2019 (fiscal 2019) as compared to 40 per cent for fiscal 2018.

"The improvement was largely driven by better earnings, which in turn was because of higher realised crude oil prices," Moody's said in a statement.

This should result in ONGC generating positive free cash flow - despite the company's high level of capital spending and shareholder returns - which Moody's expects the company will use to reduce its borrowings.

Its credit metrics will likely remain appropriate for its rating category over the next 12-18 months.