Published on 29/11/2017 4:55:30 PM | Source: Dion Global Solutions Ltd.
Moody`s assigns Baa2 to IRFC`s proposed green bonds
Moody's Investors Service, a global rating agency, has assigned a Baa2 rating to Indian Railway Finance Corporation Limited's (IRFC) proposed standalone USD senior unsecured green bonds. “The rating outlook is stable,” says Moody’s. The senior debt rating is subject to receipt of final documentation, the terms and conditions of which are not expected to change in any material way from the draft documents reviewed by Moody's.
The rating agency said that IRFC's ratings are derived primarily from its close links with the government, because the company is the external borrowing arm of the Ministry of Railways (MOR). IRFC raises funds for capital investment in Indian railway infrastructure, which it then leases to the ministry.
Moody's has determined that IRFC's credit profile is inseparable from the government's credit profile, given the control exercised by the MOR over IRFC and its assets. Government policies and the level of support provided by the ministry are, therefore, the main factors in determining IRFC's funding costs, the growth in its profitability and, ultimately, its overall credit quality.
The company's ratings are therefore in line with the foreign-currency bond rating of the Government of India. The agency said that ratings could face negative pressure if IRFC's lease finance business with the MOR changes in such a way that the company's credit exposure extends beyond the MOR. Besides, there is a change in the government's supportive stance toward IRFC; or (3) Moody's downgrades the sovereign's foreign-currency debt rating.
