Stable outlook for rail financier, says S&P

S&P Global Ratings has affirmed its ‘BBB-‘ long-term issuer credit ratings on Indian Railway Finance Corp (IRFC). The outlook on the rating is stable. It has also affirmed ‘BBB-‘ long-term issue rating on the company’s senior unsecured notes.

The stable outlook on IRFC mirrors the outlook on the sovereign credit rating on India (unsolicited rating BBB-/Stable/A-3).

“It reflects our assessment of an almost certain likelihood of extraordinary government support for IRFC in the event of financial distress,” said S&P on 28 Sept 2018.

“We believe IRFC will continue to play a critical role in the Indian government’s economic development plans and policies notwithstanding the government’s plan to sell a minority stake. Even with the sale of a stake, we expect IRFC to maintain its current business model, public-sector-entity status, and support from the sovereign,” said S&P.

RFC raises funds to buy rolling assets, which are leased to Ministry of Railways (MoR) under finance lease agreements. Its policy role and terms under which it operates are clearly spelt out in the Memorandum of Understanding (MoU) that it signs with MoR annually. fiinews.com