Downgrade may push down Re, ECB costs up

MUMBAI, June 4: Trade and industry greeted the news of the an imminent downgrading by Moody's with apprehension and gloom. If this happens, ...

MUMBAI, June 4: Trade and industry greeted the news of the an imminent downgrading by Moody’s with apprehension and gloom. If this happens, the rupee is likely to come under pressure and cost of external commercial borrowings (ECBs) rise further, industry sources said.

"The business community is not getting any good news since the beginning of this year… let’s add yet another bad news," said a Mumbai-based industrialist. "The news of Moody’s downgrade will certainly hit the cost of borrowings in the short run. But as the news of economic revival trickles in by the end of the current year, there would be market improvement in the sentiments abroad," said UTI chairman G P Gupta.

Gupta said the plans of UTI’s forthcoming dollar-denominated offshore funds remains unchanged as it will not face any problems as the returns on these investments would be high and many patriotic NRIs would like to invest in their home country.

Story continues below this ad

When Standard & Poor’s downgraded India’s outlook, the rupee plummeted from 40.67 to41.19 against the dollar. The rupee continued to fall further thereafter.

But corporates say that if Moody’s downgrades India, the cost of funds to be raised overseas would increase substantially. Companies like Power Finance Corporation (PFC) which were planning to raise funds through ECBs will have to review their plans.

"The sanctions imposed on the country after the nuclear explosions along with the possible downgrading has seen the business outlook for the country plunge," says an exporter.

According to bankers, most of the companies will look to the domestic markets to raise funds instead of overseas markets. "If the country rating does become negative, corporates will not be able tap both debt and equity markets abroad," a top BoB official said.

Air India safety violations, Air India show cause notices, Air India Boeing 787 crash, Air India London Gatwick crash, DGCA Air India inspections,

‘Unfortunate’: SC slams reports suggesting ‘pilot error’ led to Air India crash

Legal3 hr ago

The Supreme Court Monday issued notice on a plea seeking an independent and expeditious investigation into the June 12, 2025, crash of an Air India Boeing Dreamliner in Ahmedabad, which killed 260 people. The bench also termed as “unfortunate” media reports which indicated that “pilot error” was to blame for the crash, purportedly quoting some preliminary findings by the AAIB.

View all shorts

Live Blog