Moody's downgrades ratings of ONGC, places negative outlook

Moody's Investors Service has downgraded Oil and Natural Gas Corporation's (ONGC) local and foreign currency issuer ratings to Baa2 from Baa1.

At the same time, Moody's has downgraded ONGC's baseline credit assessment (BCA) to baa2 from baa1; the senior unsecured bonds issued by ONGC to Baa2 from Baa1; the senior unsecured bonds guaranteed by ONGC and issued by ONGC Videsh and ONGC Videsh Vankorneft to Baa2 from Baa1; and the foreign and local senior unsecured ratings on ONGC Videsh and ONGC's MTN program to (P)Baa2 from (P)Baa1.

The outlook on all ratings remains negative.

There has been a significant deterioration in oil prices over the last month, which could persist for most of 2020. However, the company decided to pay an interim dividend of Rs 5 per share on 16 March 2020, resulting in cash outflows of Rs 6300 crore, which has reduced its cash reserves.

ONGC had consolidated cash and cash equivalents of Rs 6700 crore at 30 September 2019.

Oil and Natural Gas Corporation (ONGC) is India's largest integrated oil and gas company. Its main operations include upstream exploration and production. It also has operations in downstream segments. ONGC is 62.78% owned by the Government of India.

Shares of the oil and gas explorer ended 3.39% higher at Rs 62.50 yesterday, 24 March 2020.

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