Moody’s downgrades Gail

Moody's Investors Service said it downgraded Gail (India) Ltd.'s long-term issuer rating to Baa3 from Baa2 following the downgrade of its baseline credit assessment to Baa3 from Baa2.

The outlook is positive, in line with the positive outlook on India's Baa3 sovereign ratings.

The downgrades reflect the continued growth in the company’s cyclical business segments, which have a much higher business risk than its core gas transmission business, Moody’s said.

The company’s business model has been evolving from a predominantly regulated transmission business to one that consists of a rising share of cyclical business segments, especially petrochemicals and liquid hydrocarbon, the agency explained.

While the ratings do not factor in sovereign support, Moody’s said it does believe there is a strong likelihood that the Indian government will provide extraordinary financial support if required due to the company’s critical role in the gas-transmission sector.

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