Fitch says BPCL privatisation is ‘event risk’ over little info on bidders

Fitch Ratings on Wednesday said the potential privatisation of BPCL is an “event risk” as there is little information about bidders and potential transaction structure.

The rating agency affirmed Bharat Petroleum Corporation Ltd’s (BPCL) long-term foreign-currency issuer default rating (IDR) at ‘BBB-‘. The outlook is ‘Negative’.

“Fitch equalises BPCL’s rating with that of its largest shareholder, the India sovereign (BBB-/Negative)…due to the strong likelihood of government support,” it said.

The rating incorporates weak petroleum product demand and gross refining margins (GRMs) in the near term, followed by a gradual recovery and strong marketing margins, reflecting BPCL’s ability to reap some benefits from low oil prices in its marketing segment, without a full cost pass-through to consumers.