MUMBAI, MAR 8: Fitch IBCA, the international credit rating agency, said on Wednesday it had assigned India a long-term foreign currency rating of `BB+'. The `BB+' rating is the highest in the sub-investment grade, the firm said in a statement. "The agency argues that sustained improvements in external solvency and liquidity coupled with India's unblemished sovereign debt service record provide a firm underpinning for the higest sub investment long term sovereign foreign currency rating," the statement said. ``This is the first ever rating assigned by the rating agency for India,'' Paul Rawkins, Senior Director, Sovereigns and Subnationals told a news conference. The firm also assigned a short-term foreign currency rating of `B' and a long-term local currency rating of `BBB-'. The firm said the local currency rating of BBB- was at the bottom of the investment grade and applied mainly to government debt. Rawkins said a short term foreign currency rating of `B' would apply to issues with a maturity of up to one year. Asked whether the ratings placed India in the junk grade, he said: "Yes it is just about in the junk grade. The reason is the fiscal deficit. We haven't got any countries in the investment grade with such a long record of high fiscal deficit and not doing anything about it." He said Fitch IPCA, unlike other agencies, did not indicate an outlook for its ratings. "We do not, like other agencies, give an outlook on the ratings. Our view is that things look more positive," Rawkins said."The ratings are strongly influenced by India's external financial adjustmentin the 1990s. However, India cannot sustain fast-paced reforms for long in the absence of broad based reforms. The loss of momentum of reform is a major constraint on the sovereign rating, as is its greatest manifestation and fiscal inconsistency," the Fitch IBCA release said. Fitch IBCA which has a technical tie-up with the domestic rating agency Credit Analysis & Research Ltd (Care) has expressed optimism in the Indian economy. "The level of private saving in India is already comparable to that of more successful developing countries in Asia. This means that additional resources to promote non-inflationary growth will have to come from public saving. However, the recent budget contained no new major initiatives to address the deterioration in the public finances," Fitch IBCA said while reposing its confidence in the incumbent government's reforms programme. Meanwhile, Fitch IBCA, a subsidiary of FIMALAC, SA, a diversified French operating company, and Duff & Phelps Credit Rating Co (D&P) announced that they have entered into a definitive merger agreement pursuant to which a subsidiary of Fitch IBCA will acquire Duff & Phelps Credit Rating Co. for $100 per share, for a total price of $528 million. The acquisition will be completed through a cash tender offer, followed by a cash merger.
