S&P affirms IRFC rating on expected govt backing

Standard & Poor's on Wednesday affirmed its ratings on the Indian Railway Finance Corporation with a 'stable' outlook as it expects timely government support for meeting debt obligations in case of financial stress.

S&P Global Ratings has 'BBB' on IRFC, the financing arm of the state-owned Indian Railways — same as the rating for the sovereign.

"IRFC benefits from an almost certain likelihood of receiving timely extra-ordinary support from its owner, the Indian government, based on its critical public policy role and integral link with the government," S&P said in a statement.

The stable outlook reflects that of the long-term sovereign credit rating for India.

"The IRFC rating is based on our view of an almost certain likelihood of timely extraordinary support from the Indian government to help IRFC meet its debt obligations in case of financial stress," it said.

"We have, therefore, equalised the rating on the financing arm of the state-owned Indian Railways with that of the sovereign."

S&P's assessment is IRFC will continue to play a critical role in the Indian government's economic development plans and policies regardless of the government's composition. This, the rating agency feels, should enable IRFC to maintain its public law status.

It, however, cautioned that the rating could face downward pressure if IRFC's role or link with the government diminishes, depending on the magnitude of such change.