Moody's downgrades rating of GAIL (India) to 'Baa2'

Moody's Investors Service has downgraded the local currency rating of GAIL (India) to 'Baa2' from 'A3'. The rating is now aligned with GAIL's Baa2 foreign currency rating, which has been affirmed by Moody's. Besides, the rating agency has kept the outlook for the company as stable.

The rating actions reflect Moody's view that GAIL (India) ultimately cannot be completely de-linked from the credit quality of the Indian government (Baa3, stable), and thus their ratings need to more closely reflect the risk that they share with the sovereign.

Moody's believes that there has been no deterioration in the intrinsic credit quality of GAIL. It is still viewed as government-related issuers and Moody's continues to assess the expectation of support from the sovereign as strong for GAIL.

The company is predominantly domestic entities -- GAIL gets almost 100% of its revenue from India -- and has a high degree of direct government ownership (57%).

GAIL (India) is the largest natural gas transmission company in India, with interests in transmission, distribution, processing, and downstream petrochemicals. GAIL operates over 8,600 kilometres of natural gas pipeline, accounting for approximately 74% of all gas transmitted in India.