The BBB- rating with stable outlook, the lowest investment grade category, denotes that PFC's capacity for payment of financial commitments is adequate, but could be impacted by changes in circumstances and economic conditions.
The equity offering will result in lowering of the governments stake in PFC to around 90%, but the rating agency did not anticipate this would lead to any change in the development role being played by the organisation.
Fitch noted a failure of the organisation could impair the flow of debt funds to state-owned power utilities, which generate around 55% of India's power and own almost all of the country's power distribution. The agency has also assigned a national long-term issuer rating of AAA(ind) and national short-term rating of F1+(ind) to the company. The ratings are based on Fitchs assessment of the strategic importance of the company to the government and is supported by the company's strong business prospects.