Moody’s downgrades ONGC’s rating, outlook negative

Moody”s Investors Service on Tuesday downgraded state-owned Oil and Natural Gas Corporation”s (ONGC) rating owing to the uncertain oil price environment, depleting cash reserves of the government and government guidelines constraining its ability to lower dividends.

“Given the increasingly uncertain oil price environment, ONGC”s depleted cash reserves, and government guidelines that constrains state-owned enterprises’ ability to lower dividends,” said Vikas Halan, senior vice-president, Moody’s. He added that ONGC’s 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.

Moody’s also downgraded the ratings of the unsecured bonds issued by ONGC and those issued by its subsidiary ONGC Videsh Ltd.