Moody’s downgrades ONGC rating to Baa2

Ratings agency Moody’s has downgraded Oil and Natural Gas Corporation Ltd.’s (ONGC) local and foreign currency issuer ratings to Baa2 from Baa1. The outlook on all ratings on ONGC remains negative, Moody’s has said.

Giving a rational of its ratings, Moody’s said, “The increasingly uncertain oil price environment, ONGC’s depleted cash reserves, and government guidelines that constrains state-owned enterprises’ ability to lower dividends, ONGC’s BCA and ratings are materially challenged at the previous rating level and its credit profile insufficient to remain above India’s Baa2 sovereign rating. The rating outlook is negative in line with the outlook on India’s sovereign rating,” said Vikas Halan, a Moody’s Senior vice president.