After lowering India's rating outlook, Standard & Poor's today cut the outlook of ten major public and private sector companies, including NTPC, IIFCL, SAIL, TCS, Infosys and Wipro.
The move follows the global rating agency S&P slashing India's outlook to negative citing slow fiscal progress and deteriorating economic indicators.
S&P has revised the rating outlook of seven public sector entities to negative from stable. The companies are Export-Import Bank of India, India Infrastructure Finance Co Ltd (IIFCL), Indian Railway Finance Corp (IRFC), Power Finance Corp (PFC), NTPC, NHPC and SAIL.
"We have equalised the ratings and outlooks on India EXIM, IIFCL, and IRFC with the sovereign rating and outlook. This reflects the entities' integral linkages with, and their critical roles to, the Government of India," S&P said in a statement.
Further, the agency noted that ratings on the government-related entities -- NTPC, NHPC and SAIL -- are highly influenced by the sovereign rating given the entities' sensitivity to government intervention in the event of financial distress.
The agency has affirmed the 'BBB-' long- term issuer credit ratings of all the seven government-related entities.
S&P also revised the rating outlook of software exporters -- TCS, Infosys and Wipro -- to negative from stable. The agency, however, has affirmed 'BBB+' long-term corporate credit ratings on these companies.
"Our ratings on Indian information technology companies reflect our 'BBB+' transfer and convertibility (T&C) assessment of India.
"We could lower the ratings on these companies if we revise downward our T&C assessment. We could lower our T&C assessment if we downgrade sovereign credit rating," S&P said.
S&P cut India's rating outlook to negative and warned of a downgrade in two years if there is no improvement in the fiscal situation and the political climate continues to worsen.
"The rating outlook of the government-owned institutions cannot be higher than the sovereign rating. So accordingly, our rating outlook has been revised," IIFCL Chairman and Managing Director SK Goel said.
IIFCL get funding from multi-lateral institutions. So, rating revision has no impact on the company, he said.
On the company's outlook being cut to negative, PFC Finance Director R Nagarajan said the move follows S&P revising the sovereign rating outlook.
In response to a query on whether the negative outlook would make borrowing expensive for the company, Nagarajan said, "We have to wait and watch. We cannot comment immediately".