Moody's ups RIL's credit outlook to positive

Rating agency Moody's today raised Reliance Industries' (RIL) credit outlook from stable to positive on anticipation of better financials post RIL's proposed $7.2 billion deal with global oil major BP.

"Moody's Investors Service has changed the outlook of the Baa2 local currency issuer rating of RIL to positive from stable," it said in a statement.

'Baa' rating implies moderate credit risk and as such may possess certain speculative characteristics. Besides, local currency ratings measure the credit performance of obligations denominated in the local currency and are comparable globally.

"The partnership agreement has generally positive credit implications for RIL, both operationally and financially," said Philipp Lotter, Senior Vice President at Moody's in Singapore.

Earlier this week, Europe's BP Plc agreed to pay $7.2 billion for 30% stake in most of Reliance Industries' oil and gas blocks, including the gigantic eastern offshore KG-D6 fields.

Moody's said the rating takes into account the recent strengthening of RIL's financial and liquidity profile.

"The decision to bring on board BP in support of India's domestic gas market development will benefit RIL from BP's deep-water drilling expertise.

"It will also allow it to share risks and costs of future exploration and infrastructure projects, thus significantly de-risking its upstream exposure," Lotter said.

"The company's local currency rating could be upgraded over the short to medium term, if its financial profile is consistently maintained," Moody's  said.

The rating agency, however, said it could again bring back RIL's rating to stable, if the company "undertakes transformational debt-funded acquisitions, or allocates material liquidity to finance growth that entails higher business risk".

Moody's has, however, retained RIL's foreign currency issuer and debt ratings unchanged at 'Baa2' with a stable outlook.