S&P Global Ratings on Thursday said it has raised long-term issuer credit rating on Reliance Industries to ‘A-‘ from ‘BBB+’. The rating firm also raised its long-term issue ratings on the senior unsecured debt the company issued to ‘A-‘ from ‘BBB+’.
“The stable rating outlook reflects our view that the conglomerate will maintain its leading market position in its key businesses, and its earnings will be sufficient to cover capital spending over the next 12-24 months,” the rating firm said.
S&P on RIL’s rating
S&P said its rating on Reliance Industries is two notches above the sovereign rating on India. “We continue to rate the company above the sovereign. This is on account of its strong balance sheet and exposure to U.S. dollar revenue from its energy-related businesses,” it said adding such factors enhance the group’s ability to withstand liquidity stress in a hypothetical scenario of sovereign stress.
S&P on RIL’s positioning and future performance
“Our assessment of India’s transfer and convertibility risk constrains any upside for the foreign currency rating on Reliance Industries” it said. Reliance Industries Ltd. will continue to increase cash flow from less cyclical consumer-facing businesses, which will improve its earnings quality, it said.
“The company’s good competitive position across its businesses will further drive earnings and cash flow, which should cover heavy investments in key businesses,” it added.
