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Moody’s Investors Service has lowered Oil India Limited’s (OIL’s) baseline credit assessment (BCA) to baa3 from baa2. This move is on the back of acquisition of an oil and gas block in Russia in 2016 and share buyback in June 2017.
Vikas Halan, Moody’s Vice President and Senior Credit Officer in a report stated, “The lowering of the BCA to baa3 from baa2 is driven by our expectation that the company’s credit metrics, which have weakened on the back of acquisition and shareholder payments, are unlikely to recover to a level more appropriate for a baa2 BCA.”
Further the rating agency stated, “The outlook on the ratings is stable, reflecting the stable outlook of India’s sovereign rating. An upgrade of OIL’s ratings to baa1 will require an upgrade of India’s sovereign rating to baa1.”
