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Standard & Poor's said on Monday that India could become thefirst of the BRIC economies to lose its investment-grade status,sending the rupee and stocks lower, less than two months aftercutting its rating outlook for the country. "Slowing GDP growth and political roadblocks to economicpolicymaking are just some of the factors pushing up the risk thatIndia could lose its investment-grade rating," the ratingsagency said in a Monday statement on a report dated June 8. S&P said the new report, "Will India Be The First BRICFallen Angel?", gave further detail as to why India'sinvestment-grade rating could be at risk. The report did not appearto represent a change in view since April. India's sovereign rating is BBB-, the lowest investment graderating, and in April S&P lowered its outlook on the rating forAsia's third-largest economy to negative from stable. Indian stocks fell into negative territory after the S&Pstatement, while the rupee skidded to as much as 55.82 to thedollar, a near one-week low, from 55.45 earlier. The benchmark 10-year bond yield rose 2 basis points following thestatement release. Traders said the bond markets were affectedlesser because offshore investors hold a small share of the market. "While INR and bonds moved on this S&P headline, it maynot have been warranted. While the report is new, the content initself is probably not," said Kumar Rachapudi, fixed incomestrategist at Barclays Capital in Singapore. "The discussion in this report has largely been covered intheir previous report when S&P revised outlook in April." The two analysts who wrote the report could not immediately bereached for comment. India recently posted annual March quarter GDP growth of 5.3percent, its weakest in nine years and far below expectations. "Setbacks or reversals in India's path toward a more liberaleconomy could hurt its long-term growth prospects and, therefore,its credit quality," said Standard & Poor's credit analystJoydeep Mukerji. The so-called BRIC economies consist of Brazil, Russia, India andChina. India has the lowest S&P rating of all the BRICcountries, and is the only one with a negative outlook from therating agency, it said in the report. "The combination of a weakening political context for furtherreform, along with economic deceleration, raises the risk that thegovernment may take modest steps backward away from economicliberalization in the event of unexpected economic shocks,"Mukerji said in S&P's Monday statement. The government's inability to push through reforms is widely blamedfor yawning current account and fiscal deficits. In addition toslowing growth, India is plagued by persistently high inflation. "S&P's warning clearly highlights the challenge facing theIndian economy, which has been crippled by the completedysfunctionality of the government machinery," said UpasnaBharadwaj, economist at ING Vysya Bank in Mumbai. (Additional reporting by Suvashree Dey Choudhury, Henry Foy andNeha Dasgupta; Writing by Tony Munroe; Editing by AradhanaAravindan). The e-commerce company in China offers quality products such as China Guardrail Forming Machine , Double Layer Forming Machine Manufacturer, and more. For more , please visit Purlin Roll Forming Machine today!
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