S&P reiterates chance of India's credit rating cut despite reforms

MUMBAI: Indian could witness a lower credit rating because of political, economic, fiscal or external factors, says Standard & Poor's Ratings Services. The outlook on India was recently revised to negative from stable.

"India was the only Asia-Pacific sovereign to see a negative rating action during the period. There is a significant chance that this trend could eventually lower the credit rating on India," said Standard & Poor's credit analyst Kim Eng Tan.

Of the 22 rated sovereigns in the Asia-Pacific, Standard & Poor's raised the credit ratings on the Philippines and South Korea during the past six months and revised the outlook on Vietnam to stable from negative. S&P upgraded the two sovereigns because their credit support improved sufficiently to offset weaker growth prospects in the next few years. ""Asia continued to register moderate economic growth despite the intensifying global economic uncertainties,"" Tan adds.

The main threat to Asia-Pacific sovereign creditworthiness in 2012-2013 remains centered around an unexpectedly severe deterioration of the eurozone's (European Economic and Monetary Union) economic and financial situation, the credit rating agency mentioned in a statement.

"We don't expect the positive trend of rating changes of the past six months to continue in the coming 12-18 months. Economic conditions in the developed world and elsewhere remain weak and uncertain," Tan said. "Where credit metrics are already weak in their rating categories, policy mistakes or hesitance could drag sovereign ratings down," he adds.

Of the 22 rated sovereigns in the Asia-Pacific, Standard & Poor's raised the credit ratings on the Philippines and South Korea during the past six months and revised the outlook on Vietnam to stable from negative.