ICRA upgrades IOC's long-term rating
Credit rating agency ICRA today upgraded the Rs 4,589-crore bond programme of Indian Oil Corporation following the decontrol of retail petrol prices and hiking prices of other oil products like cooking fuel and diesel.business Updated: Jun 28, 2010 21:38 IST
Credit rating agency ICRA on Monday upgraded the Rs 4,589-crore bond programme of Indian Oil Corporation (IOC) following the decontrol of retail petrol prices and hiking prices of other oil products like cooking fuel and diesel.
"ICRA has upgraded the long-term rating on outstanding Rs 45.89 billion long-term bonds programme of IOC from LAA+ and 'positive outlook' to LAAA," the agency said in a statement.
LAAA indicates the highest credit quality rating assigned by ICRA and the instrument thus rated carries the lowest risk.
ICRA said it has withdrawn the LAA+ (positive) and A1+ ratings assigned to the bank limits of IOC at the request of the company.
"The upgrade in the long-term rating of IOC follows the recent decision of government to grant autonomy to the PSU oil marketing companies to revise petrol prices, and possible autonomy in revising diesel prices in the near-term," it added.
ICRA said the upgrade also considers price hikes announced by the government on the four sensitive petroleum products -- petrol, diesel, LPG (domestic) and SKO (PDS kerosin), which will reduce the gross under recovery burden for the PSU marketing companies and improve their liquidity position.
Before the price hikes, oil PSUs were projected to lose Rs 74,300 crore in FY11 because of selling petrol, diesel, domestic LPG and kerosene below cost. IOC alone was estimated to account for about half the under recovery.
ICRA said the government measures would also lead to lower burden on its fiscal position.