Sovereign rating by fitch ratings and JCRA rating agency

Japan Credit Rating Agency Ltd., has, after a review, on 19th August, 2008, affirmed the BBB+ ratings on the foreign currency and local currency long-term senior debts of India with stable outlook. The agency is of the view that in the medium to long term, the Indian economy has high potentiality to grow faster than 7% per year. The stability of the country’s financial system has been enhanced as the disposal of nonperforming loans progressed due in part to the revision of the related legislation. The Agency has opined that the country’s foreign liquidity position has been maintained at comparatively sound levels. JCRA points out that the planned increase in tax revenues will continuously hold the key to achieving the fiscal deficit target. The agency sees no immediate concern over India’s foreign currency liquidity position, given its lower debt service ratio and huge foreign exchange reserves which now rank fourth in the world. 

Earlier, Fitch Ratings agency, in a review of Sovereign rating of India, on 15th July, 2008, had also affirmed its previous rating for India at BBB minus on foreign currency and lock currency Issuer Default Rating, while revising the “outlook” on India’s long-term Local Currency Issuer Default Rating (IDR) from “stable” to “negative”. Thus, what the agency had done is only a revision in the outlook for India’s Local Currency. 

A rating outlook only indicates the direction a rating is likely to move over a one to two-year period. Outlooks may be positive, stable or negative. A positive or negative rating outlook does not imply that a rating change is inevitable.