Press Trust of India / New Delhi Sep 25, 2009, 19:26 IST
Rating agency Standard & Poor's (S&P) has removed the recently listed power firm NHPC from CreditWatch as there are chances that the government would provide ‘extraordinary support’ to the company in the event of any financial distress.
CreditWatch is a warning by a rating agency indicating that a company's credit rating may change after the current review is concluded.
S&P also retained lowest investment rating on NHPC.
"We affirmed the rating on NHPC and removed it from CreditWatch following our assessment of a 'BBB-' stand-alone credit profile, as well as our opinion that there is a high likelihood that the government of India would provide extraordinary support for the company in the event of financial distress," S&P said in a release.
The rating agency said that there is a ‘high’ likelihood of extraordinary government support is based on its assessment of NHPC's "very strong" link with the government.
The rating agency had put NHPC on CreditWatch on July 1, 2009.
It further said that the ongoing support from the government is reflected in a tripartite agreement (between NHPC, state electricity boards and the government), which largely mitigates the risk of any delay in payments from NHPC's customers -- the state electricity boards -- that have weak credit profiles.
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