(The following was released by the rating agency)
October 04 (Fitch) Fitch Ratings has assigned India-based
Indian Oil Corporation Limited's (IOC, 'BBB-'/Negative) proposed
notes an expected rating of 'BBB-(EXP)'.
The notes are rated at the same level as IOC as they will
constitute direct, unconditional, unsubordinated and unsecured
obligations of the company. The final rating is contingent upon
the receipt of final documents conforming to information already
received. The ratings reflect IOC's position as India's largest
oil refining and marketing company with 30.8% of the country's
refining capacity and 46% of the petroleum product market.
IOC's ratings are equalised with those of India
('BBB-'/Negative) to reflect the company's strong linkage with,
and strategic importance to the state. The government owns
78.92% of IOC. Fitch expects the state to continue to provide
support to IOC, given its role as the government's extended arm
for policy implementation in the energy sector.
IOC holds substantial marketable investments and has easy
access to external financing, which would provide a liquidity
buffer against challenging economic conditions. IOC has 10
refineries with an aggregate refining capacity of 65.7 million
tonnes per annum.
WHAT COULD TRIGGER A RATING ACTION?
Negative: Future developments that may, individually or
collectively, lead to negative rating action include:
- a perceived weakening of IOC's linkages with the
Government of India (GoI)
- change in the GoI's ratings
Positive: The current Rating Outlook is Negative reflecting
that of the ratings of India. As a result, Fitch's sensitivities
do not currently anticipate developments with a material
likelihood, individually or collectively, of leading to a rating
upgrade in the near-term.