India has inched farther away from junk-bond status.
Moody’s Investors Service MCO +0.71% on Thursday changed its ratings outlook on Asia’s No. 3 economy to positive from stable, citing the “increasing probability that actions by policy makers will enhance the country’s economic strength.” But it maintained its Baa3 rating, one level above junk, saying the Indian economy is still heavily exposed to external and financial shocks. Moody’s has rated India at Baa3 since 2004.
The move is a vote of investor confidence in the economic management of Prime Minister Narendra Modi and Reserve Bank of India Gov. Raghuram Rajan. Standard & Poor’s raised its India outlook to stable last fall. Fitch Ratings has had a stable outlook on India since 2013.
All three of the big agencies currently assign Indian debt their lowest investment-grade ratings. They cite similar reasons. Inflation is high. The public sector—the federal government plus the states—is highly indebted. Infrastructure is sorely deficient. The banking system is burdened with bad assets.
“While policies are beginning to address each of these factors, the extent of likely improvements is as yet unclear,” Moody’s said Thursday.
via India’s Credit Outlook Gets Boost From Moody’s – India Real Time – WSJ.
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