TEXT-Fitch Rates IOC's Proposed Notes 'BBB-(EXP)'

(The following was released by the rating agency)

October 04 (Fitch) Fitch Ratings has assigned India-based Indian Oil Corporation Limited's (IOC, 'BBB-'/Negative) proposed notes an expected rating of 'BBB-(EXP)'.

The notes are rated at the same level as IOC as they will constitute direct, unconditional, unsubordinated and unsecured obligations of the company. The final rating is contingent upon the receipt of final documents conforming to information already received. The ratings reflect IOC's position as India's largest oil refining and marketing company with 30.8% of the country's refining capacity and 46% of the petroleum product market.

IOC's ratings are equalised with those of India ('BBB-'/Negative) to reflect the company's strong linkage with, and strategic importance to the state. The government owns 78.92% of IOC. Fitch expects the state to continue to provide support to IOC, given its role as the government's extended arm for policy implementation in the energy sector.

IOC holds substantial marketable investments and has easy access to external financing, which would provide a liquidity buffer against challenging economic conditions. IOC has 10 refineries with an aggregate refining capacity of 65.7 million tonnes per annum.


Negative: Future developments that may, individually or collectively, lead to negative rating action include:

- a perceived weakening of IOC's linkages with the Government of India (GoI)

- change in the GoI's ratings

Positive: The current Rating Outlook is Negative reflecting that of the ratings of India. As a result, Fitch's sensitivities do not currently anticipate developments with a material likelihood, individually or collectively, of leading to a rating upgrade in the near-term.