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Explained: Why India’s credit rating should be upgraded from lowest investment grade

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1 year ago

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India’s sovereign credit rating across all major rating agencies be it S&P Global, Fitch or Moody’s stands at the lowest investment grade. This is the case for an economy which is amongst the fastest growing in the world. Not only that, the Indian economy is set to become the third largest economy in the world in the coming years.
So why then is its sovereign credit rating so low? And is there a credible case for India’s rating to be upgraded? In this week’s episode of TOI Business Bytes, Madan Sabnavis the Chief Economist at Bank of Baroda explains the importance of a good credit rating and what parameters rating agencies typically look at to decide the investment grade.

Why India’s Credit Rating Should Be Upgraded | Fastest Growing Economy But Lowest Investment Grade

Sabnavis tells TOI, “A credit rating is a rating which is given to a particular country, which tells you whether there is any possibility of a default. If a particular country is able to honor all its debt commitments, then it would ideally be in a AAA-rated stage, and as this ability to service debt keeps coming down, it could be moving downwards, right up to BBB which is considered to be the lowest level of investment grade.”
Watch the video above to know why Madan Sabnavis thinks that there is a strong case for India’s credit rating to be upgraded and why emerging markets cannot be measured with the same yardstick as the developed world. He also lays emphasis on the fact that India is an attractive destination for foreign investors and how 100% of the debt is denominated in rupees.
India’s credit rating currently stands at BBB- for S&P and Fitch and Baa3 for Moody’s. Any grade below this is “speculative” and the credit risk rises as you move down to the “D” rating which indicates default. Madan Sabnavis is of the view that India deserves not just a basic upgrade but one to a level of at least A. “I think that India definitely does deserve an upgrade and upgrade also of a significant level, not just from BBB- to say BBB, it’s more in the level of round A at a minimum,” he says.
Sabnavis also talks about how India has come a long way from the fear of being accorded the “junk” status and how despite a high fiscal deficit, a robust reforms situation and the credible handling of the global pandemic situation in terms of liquidity management all warrant a thumbs up from rating agencies in the form of an upgrade.

 

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Investment

S&P/TSX composite up more than 100 points, U.S. stock markets mixed

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3 weeks ago

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October 16, 2024

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TORONTO – Canada’s main stock index was up more than 100 points in late-morning trading, helped by strength in base metal and utility stocks, while U.S. stock markets were mixed.

The S&P/TSX composite index was up 103.40 points at 24,542.48.

In New York, the Dow Jones industrial average was up 192.31 points at 42,932.73. The S&P 500 index was up 7.14 points at 5,822.40, while the Nasdaq composite was down 9.03 points at 18,306.56.

The Canadian dollar traded for 72.61 cents US compared with 72.44 cents US on Tuesday.

The November crude oil contract was down 71 cents at US$69.87 per barrel and the November natural gas contract was down eight cents at US$2.42 per mmBTU.

The December gold contract was up US$7.20 at US$2,686.10 an ounce and the December copper contract was up a penny at US$4.35 a pound.

This report by The Canadian Press was first published Oct. 16, 2024.

Companies in this story: (TSX:GSPTSE, TSX:CADUSD)

The Canadian Press. All rights reserved.

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Economy

S&P/TSX up more than 200 points, U.S. markets also higher

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4 weeks ago

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October 11, 2024

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TORONTO – Canada’s main stock index was up more than 200 points in late-morning trading, while U.S. stock markets were also headed higher.

The S&P/TSX composite index was up 205.86 points at 24,508.12.

In New York, the Dow Jones industrial average was up 336.62 points at 42,790.74. The S&P 500 index was up 34.19 points at 5,814.24, while the Nasdaq composite was up 60.27 points at 18.342.32.

The Canadian dollar traded for 72.61 cents US compared with 72.71 cents US on Thursday.

The November crude oil contract was down 15 cents at US$75.70 per barrel and the November natural gas contract was down two cents at US$2.65 per mmBTU.

The December gold contract was down US$29.60 at US$2,668.90 an ounce and the December copper contract was up four cents at US$4.47 a pound.

This report by The Canadian Press was first published Oct. 11, 2024.

Companies in this story: (TSX:GSPTSE, TSX:CADUSD)

The Canadian Press. All rights reserved.

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Economy

S&P/TSX composite little changed in late-morning trading, U.S. stock markets down

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4 weeks ago

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October 10, 2024

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TORONTO – Canada’s main stock index was little changed in late-morning trading as the financial sector fell, but energy and base metal stocks moved higher.

The S&P/TSX composite index was up 0.05 of a point at 24,224.95.

In New York, the Dow Jones industrial average was down 94.31 points at 42,417.69. The S&P 500 index was down 10.91 points at 5,781.13, while the Nasdaq composite was down 29.59 points at 18,262.03.

The Canadian dollar traded for 72.71 cents US compared with 73.05 cents US on Wednesday.

The November crude oil contract was up US$1.69 at US$74.93 per barrel and the November natural gas contract was up a penny at US$2.67 per mmBTU.

The December gold contract was up US$14.70 at US$2,640.70 an ounce and the December copper contract was up two cents at US$4.42 a pound.

This report by The Canadian Press was first published Oct. 10, 2024.

Companies in this story: (TSX:GSPTSE, TSX:CADUSD)

The Canadian Press. All rights reserved.

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