Standard & Poor’s lowers India’s rating outlook to negative, warns of downgrade

Standard and Poor’s (S&P), the Global rating agency has lowered India’s rating outlook to -ve citing slow progress on its fiscal situation, as well as deteriorating economic indicators. S&P has also warned of a further downgrade India’s rating in 2 years if there is no improvement in the fiscal situation.

Implications:-

  • The lowering of outlook from stable, to -ve is expected to make ECB (External Commercial Borrowings) expensive for Indian companies.
  • It may also have implications for the capital market.

S&P held that the investment and economic growth slowed whilst the CAD (Current Account Deficit) widened. In 2011, S&P had stripped the U.S. of its respected AAA credit rating.

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