HVK Archives: Nuke tests don call for downgrade, says S&P chief
Nuke tests don call for downgrade, says S&P chief - The Financial Express
Tamal Bandyopadhyay & Anirban Nag
()
May 14, 1998
Title: Nuke tests don call for downgrade, says S&P chief
Author: Tamal Bandyopadhyay & Anirban Nag
Publication: The Financial Express
Date: May 14, 1998
"THE fundamentals of the Indian economy are strong enough to be
able to withstand any pressure arising out of economic
sanctions... The sanctions will not have any long-term impact,"
said Standard & Poor's president and chief rating officer Leo C
O'Neill, who was in Mumbai to attend Crisil's board. S&P has a
nine per cent stake in Crisil.
In an exclusive interview to The Financial Express on Tuesday,
O'Neill said: s a rating agency, we don't look at things from
the moral point of view. I cannot offer any comment on whether
nuclear tests are good or bad. All can say is that the Indian
economy is strong enough to withstand international pressure. At
this point of time, these tests do not call for any downward
revision in India rating. only hope that this is the end of
it, he was quick to add.
Subsequently, the Indian government carried out two more nuclear
tests on Wednesday to complete the series. "In the medium- and
long-term, I am sure these sanctions will not have any impact. I
am sure the Indian government will negotiate and things will be
sorted out soon," he said.
O'Neill stressed that the global agency will not review the
Indian rating following the nuclear tests. "We have very recently
reviewed the India rating and reaffirmed the BB-plus rating for
its long-term foreign currency borrowing programme. Nothing has
changed since then," he said. The agency, on March 23, had
confirmed the outlook on India's long-term foreign currency
rating of 'BB-plus' and local currency rating of 'BBB-plus' as
stable. It said: "The new government is likely to continue with
cautious liberalisation. but faces serious challenges in
strengthening public finances and reforming PSUs." "We still
stick to that rating. India is a vast market and is bound to
survive temporary blips. The FII inflow might be affected for
the time being but in the long run, things will remain
unaffected," O'Neill said. Another international credit-rating
agency, Moody's Investors Service, is yet to speak out after the
Vajpayee government was installed in New Delhi. Moody's had
threatened to review for a possible downgrade India's Baa 3/P-3
country ceilings for foreign currency bonds and notes and its BA1
country ceiling for foriegn currency bank deposits. A negative
outlook was assigned to these ceilings in March, 1997 when
Moody's introduced outlooks for its country ceilings. "Moody's
is concerned that the impetus for structural reform has
diminished when the country ceilings were raised to their current
level in December. 1994." the agency had said in January this
year.
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