The Hindu : Moody's to review foreign currency ceiling for upgrade

Online edition of India's National Newspaper
Friday, Nov 15, 2002

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Moody's to review foreign currency ceiling for upgrade

MUMBAI NOV. 14. Moody's Investors Service is to review India's `Ba2' foreign currency country ceiling for debt and `Ba3' foreign currency country ceiling for bank deposits for a possible upgrade following substantial strengthening of the country's external financial situation.

The foreign currency issuer rating for India — the proxy for the rating that would likely be assigned if the Government were to issue a foreign currency denominated bond in the international capital markets — has also been placed on review for possible upgrade, Moody's said in a statement from New York today.

At present, however, the Government has no such bonds outstanding nor were there any rated government-guaranteed Eurobonds outstanding, the global rating agency said.

The `Ba2' domestic currency bond rating of the Government was not on review. In fact, the outlook on Government's domestic currency bond rating remains negative. In addition, the Reserve Bank of India's foreign exchange assets have climbed rapidly, reaching $61 billion in recent weeks, external debt and debt service ratios have declined to manageable levels and short-term debt was negligible.

The ongoing analysis of India was focused on whether the fiscal problems facing the Government could spill over into a balance of payments crisis, a linkage that would limit the differential between the foreign and domestic currency ratings, it added. Moody's said India's stronger external position has been achieved in spite of continued stress on the country's public finances and last year's broad-based reduction in import tariffs.

The current account has moved into a small surplus, due to a good performance of both merchandise and service exports and surprisingly stable inflows of worker remittances from Indian workers who live abroad, it added.

PTI

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