)
The government’s 10 per cent stake sale in Indian Oil Corp (IOC) will not have any impact on the company’s ratings, Moody’s Investors Service and Fitch Ratings said on Wednesday. In separate statements issued on Wednesday, the two agencies said after the stake sale, the government will continue to hold a majority stake of 58.57 per cent in IOC.
The government on Monday sold 10 per cent stake in IOC through an offer for sale and raised over Rs 9,300 crore. Moody’s Investors Service said IOC’s ratings remain supported by its strategic importance to the country, given its position as India’s largest refiner and distributor of petroleum products. “The government will retain its majority stake in the company after the stake sale, and as such does not affect our assessment of sovereign support for IOC,” Moody’s V-P and Senior Credit Officer Vikas Halan said.
Fitch Ratings said refiner IOC’s ratings are “unaffected” by lower state stake. “The other two smaller state-controlled oil refining and marketing companies — Bharat Petroleum Corporation Limited and Hindustan Petroleum Corporation Limited — have historically had lower state ownership at 55 per cent and 51 per cent, respectively,” said Fitch Ratings.
The ratings of the three public sector oil refining and marketing companies are equalised with that of the state in line with Fitch’s Parent-Subsidiary criteria. Fitch believes the state continues to have close operating and strategic linkages with these entities despite recent reforms to fuel prices and subsidy schemes.
“We believe these three companies will continue to be important policy tools that the state will use to meet socio-economic objectives when required,” the agency said. Moody’s added it would reassess the level of government support incorporated in the company’s ratings only if the government’s shareholding falls below 51 per cent, or if there are other indicators of change in the relationship between the government and IOC.
The government on Monday sold 10 per cent stake in IOC through an offer for sale and raised over Rs 9,300 crore. Moody’s Investors Service said IOC’s ratings remain supported by its strategic importance to the country, given its position as India’s largest refiner and distributor of petroleum products. “The government will retain its majority stake in the company after the stake sale, and as such does not affect our assessment of sovereign support for IOC,” Moody’s V-P and Senior Credit Officer Vikas Halan said.
Fitch Ratings said refiner IOC’s ratings are “unaffected” by lower state stake. “The other two smaller state-controlled oil refining and marketing companies — Bharat Petroleum Corporation Limited and Hindustan Petroleum Corporation Limited — have historically had lower state ownership at 55 per cent and 51 per cent, respectively,” said Fitch Ratings.
The ratings of the three public sector oil refining and marketing companies are equalised with that of the state in line with Fitch’s Parent-Subsidiary criteria. Fitch believes the state continues to have close operating and strategic linkages with these entities despite recent reforms to fuel prices and subsidy schemes.
“We believe these three companies will continue to be important policy tools that the state will use to meet socio-economic objectives when required,” the agency said. Moody’s added it would reassess the level of government support incorporated in the company’s ratings only if the government’s shareholding falls below 51 per cent, or if there are other indicators of change in the relationship between the government and IOC.
