NEW DELHI: Moody’s on Wednesday retained the ‘Baa3’ foreign currency long term issuer rating of Power Finance Corp and Rural Electrification Corp, both indicating moderate credit risk.
The agency said these ratings on the two entities are underpinned by their linkages with the government.
Global rating agency Moody’s Investors Service has maintained a stable outlook for both companies.
Moody’s Vice President and Senior Analyst Vineet Gupta said that PFC as well as REC’s foreign currency issuer ratings of Baa3 “is in line with the Baa3 rating for the Government of India.
Generally, Baa rating implies moderate credit risk. Moody’s noted the ratings are underpinned by their linkage with the government, given the two companies’ ownership as well as the strategic role they play in the government’s plans for the power sector.
PFC and REC are leading lenders for the power sector. Further, Moody’s said PFC and REC operate in a highly regulated industry, where the policies and the level of support provided by the government have positive implications on its cost of capital, business growth and overall profitability, among others.