Reliance, ONGC Credit Quality to Weather India Tax, Moody’s Says
(Bloomberg) -- Billionaire Mukesh Ambani's Reliance Industries Ltd. and state-run Oil & Natural Gas Corp. are unlikely to suffer a “material” dent to their credit quality from India's decision to levy additional taxes on local fuel exports and oil production given already elevated crude prices, Moody's said.
“While profits generated from oil exports will fall because of windfall taxes, they will likely remain higher than the levels over April 2020 to March 2022 if refining margins are sustained at the highs seen in April to June this year,” wrote Moody's analyst Hui Ting Sim in a note. “High crude oil prices will support the earnings of oil producers.”
India's move to impose levies on energy firms from the start of July to tap windfall gains from high oil prices caused the stock prices of both Reliance and ONGC to fall on Friday and for spreads on their dollar bonds to widen. Spreads on some of those notes have stabilized or tightened since as investors assess the impact of the government charges.
Moody's expects the government measures to be temporary and the taxes to be eventually adjusted, according to rating company's note. The taxes are aimed at helping India shore up revenues as it faces challenges in managing its fiscal deficit, after the government joined a growing cohort of countries to introduce such levies.
More stories like this are available on bloomberg.com
©2022 Bloomberg L.P.
-
A New Samvat Wishlist: Inclusive Prosperity And Human Development
India has strengthened its economic foundations through infrastructure, digital access and enterprise. Its next growth chapter must deepen productivity, create better livelihoods and widen participation in prosperity.
-
Love, Sex Aur Dhokha: The Audacious Plot To Spy On Jensen Huang
A Taipei dinner, a Singapore chip buyer and a suspected Chinese asset: inside the alleged spy operation that got close to NVIDIA's Jensen Huang.
-
Ten Things I Learnt This Samvat
Patience can be a trap. Cheap stocks can stay cheap. Leverage can wipe you out. What did Samvat 2082 teach us? Niraj Shah writes on 10 lessons from the year gone by.
-
Talking Points This Week: Tech Nerves, FII Buying, And A Faraway Banking Shock
The global markets are not shining this Diwali. The exception in the large markets is, India.
-
Midterm Rally Lasted A Day. The Hard Reality Of A Divided US May Last Two Years | Opinion
Between a contested AI boom, a debt ceiling that arrives in 2027 and a president with every incentive to act alone, the next two years may prove more volatile than the first day's rally suggests.
-
Blue Wave Will Derail the AI Trade but Won't Dismantle the AI Era | Unhedged Position
The Democrats' sweep of the US Congress will see politics collide with economic forces both over the long and short term.
-
It's Time To Take The GST Council's Bet On Trust Global
Payment records can prove India's services exports, and clear, proportionate rules can bring foreign digital sellers into the tax net.
-
Opinion | India at 38: From Innovation Overperformer to Innovation Powerhouse
India now has 453 VC-backed deep science startups, 18 of them late-stage, after 117 percent growth since 2020. Laurus Labs, at USD 9.3 billion, is the most valuable deep science company in any middle-income economy outside China.
-
Navigating Energy Crossroads: S Jaishankar's Call For Diversified Supply Chains At G20 Ministerial Meeting
As geopolitical fault lines continue to test maritime trade routes and commodity flows, Jaishankar's message remains pertinent: true economic resilience requires open markets, protected transit lines, and a genuine commitment to multilateral cooperation rather than coercion.
