Power Grid Corp's outlook negative: S&P

"The negative outlook on Power Grid is consistent with the Sovereign credit rating outlook, and reflects Power Grid's sensitivity to government intervention," S&P said.

It has assigned 'BBB-' long-term corporate credit rating to Power Grid Corp of India Ltd (PGCIL), with a negative outlook. It has also assigned 'BBB-' to its proposed issue of up to USD 1 billion unsecured long-dated notes.

A largely national presence exposes Power Grid to the country and macroeconomic risk of India, it said.

Moreover, it added, political considerations will continue to influence the ability and willingness of state-owned electricity boards – the company's key customers – to

increase tariffs, limiting the improvement in their weak credit profiles.

Overall, however, PGCIL's stand-alone credit profile of 'BBB-' reflects the company's strong market position, S&P said. "We assess the company's business risk profile as

'satisfactory'. The company also plays the important role of planning for nationwide transmission infrastructure," it said.

But, S&P said: "We could downgrade Power Grid if we lower the sovereign credit rating or ongoing government support declines."

The rating agency further noted: "We could revise the outlook to stable if we revise the sovereign rating outlook to stable and Power Grid's stand-alone credit profile is unchanged."

It said it did not expect Power Grid's "significant" financial risk profile to change materially over the next two to three years,

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