India still junk, says Moody’s. Big deal, says St

MUMBAI: US rating agency Moody’s on Monday said it will keep India at non-investment or junk grade, on a par with Armenia and Guatemala, as it does not differentiate between Indian companies borrowing abroad and foreign firms making investments here.

“It means nothing. May be they are cautious with the US subprime crisis, which has affected global credit spreads,” said Prakash Subramanian, director & regional head, South Asia Capital Markets., Standard Chartered Bank.

“I think after the S&P upgrade, Moody’s is only delaying the inevitable.”

Standard & Poor’s , a rival to Moody’s upgraded India to investment grade on January 30. This  has already been factored in the pricing levels for Indian companies.  Subramanian said.

Will firms borrowing overseas pay more?

“Companies which borrow abroad are large and they do so on their own strength. For example, when Reliance borrows, analysts will look at its strength rather than the India rating.

In the same way, global investors and funds will continue to look at India because of the high returns here despite the ratings,” said S Raghavanan, head of fund management, IDBI Capital Markets.