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Moody's warns of steep downgrade
The international credit rating agency Moody's on Thursday warned of downgrading Bharat Petroleum Corporation (BPCL) to ‘Ba1’ if the government goes ahead with privatisation by selling its stake to private entity.
Mumbai: The international credit rating agency Moody's on Thursday warned of downgrading Bharat Petroleum Corporation (BPCL) to 'Ba1' if the government goes ahead with privatisation by selling its stake to private entity.
Currently, being a state-owned enterprise, BPCL has a 'BBB'- rating which is on par with sovereign rating. 'Ba1' rating will be equal to its current baseline credit assessment.
Last year, government had sold its entire stake in HPCL to state-owned ONGC, but the oil marketeer still enjoys 'BBB'- rating considering ONGC ownership by the government.
Moody's said the proposed stake sale in BPCL would remove the company's links and prompt bond redemption, a credit negative.
On 30 September, the group of secretaries on disinvestment gave its approval for to sell government's entire 53.29 per cent stake in BPCL, which is likely to be completed by March 31, next year.
The agency noted that BPCL's credit ratings will depend on whether the buyer is another state-owned company or a non-state-owned company if the stake sale goes ahead.
The stake sale will require further approvals from the cabinet of ministers and both houses of the Parliament.
