Moody's downgrade may hit IndianOil loan plans
New Delhi   01-Aug-2008
Credit rating agency Moody's today downgraded IndianOil ratings, which will make it difficult for the refiner to rise loans abroad. Moody's brought the company's ratings to Baa3 from Baa2 due to the "material decreases in IndianOil 's profitability as a result of continued regulatory restrictions in India," Moody's said in a statement. IndianOil 's net profit declined by 71 per cent in the first quarter of the current financial year. "The downgrade would mean they would have no buyers for their debt papers. It would also impact borrowing from overseas banks," said a Mumbai-based analyst. Of its total borrowings of Rs 42,500 crore, the company has foreign currency loans of around $3 billion (about Rs 12,000 crore) at an average interest rate of 4-5 per cent. The interest rate on these loans is likely to rise," another Delhi-based analyst said. He added that the company would not have problems raising money in India as government-owned banks would still offer loans.