Credit ratings decoded: How a simple upgrade can change a country's fortune
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Time of India
4 hours ago
- Time of India
S&P upgrade likely to cut govt borrowing costs: Finmin official
New Delhi: S&P's upgrade of its long-term sovereign credit rating on India after 18 years citing economic resilience can potentially lower the government's borrowing costs, a senior finance ministry official said. Independence Day 2025 Modi signals new push for tech independence with local chips Before Trump, British used tariffs to kill Indian textile Bank of Azad Hind: When Netaji Subhas Chandra Bose gave India its own currency The upgrade in rating to 'BBB' from the lowest investment grade of 'BBB-' will add to the investor optimism about the country's strong macroeconomic fundamentals, despite persisting external headwinds, including an extra 50% US tariffs on Indian exports, he reckoned. The yield on 10-year benchmark government securities inched up 10 basis points over the past one month to close at 6.41% on Thursday, but it still remained 45 basis points lower than a year before. The yield has risen in recent weeks over concerns about lower-than-expected direct tax collections, over-supply of papers and fading hope of an interest rate cut in October, according to analysts. The central bank has trimmed the repo rate by 100 basis points since February to 5.5% now. The focus has now shifted to transmission. However, a robust growth outlook, as reaffirmed by S&P, surplus liquidity in the system and overall supportive monetary policy settings will have a positive impact on the G-sec yield, the official said. S&P expects a strong annual growth rate of 6.8% for India for the next three years, with a 6.5% expansion in FY26. Retail inflation hit an eight-year low of 1.55% in July. Lower inflation will ease the pressure on the RBI to maintain supportive monetary policies in the coming quarters, S&P has said. "(Moreover) The fact that S&P also thinks the US tariff impact will be manageable, given India's relatively less reliance on external trade for growth, should also soothe nerves of investors," said another official. Moreover, monsoon rains have been plentiful, and global crude oil prices have retreated to $67 per barrel after a brief surge in the aftermath of the Israel-Iran conflict, and could stay subdued for the rest of FY26 amid expected steady supply. All these would weigh down the bond yield, officials reckon. 'No supply glut by govt' The government won't flood the market with its securities and private players won't be crowded out, officials told ET recently. The Centre plans to stick to its FY26 gross market borrowing target of ₹14.82 lakh crore to avoid negative surprises, they had said. Moreover, it has sharply hiked the capex allocations for the ministries of railways and road transport & highways in recent years. So, it's not using entities linked to these ministries to garner extra-budgetary resources, reducing pressure on the market. States, too, have been promised ₹1.5 lakh crore in capex loans by the Centre from its budget in FY26. This reduces their market borrowing needs proportionately.
Economic Times
4 hours ago
- Economic Times
S&P upgrade likely to cut govt borrowing costs: Finmin official
S&P's upgrade of India's sovereign credit rating after 18 years, driven by economic resilience, may lower government borrowing costs and boost investor confidence. Despite external challenges like US tariffs, India's strong macroeconomic fundamentals and growth outlook are reaffirmed. Tired of too many ads? Remove Ads Tired of too many ads? Remove Ads New Delhi: S&P's upgrade of its long-term sovereign credit rating on India after 18 years citing economic resilience can potentially lower the government's borrowing costs, a senior finance ministry official upgrade in rating to 'BBB' from the lowest investment grade of 'BBB-' will add to the investor optimism about the country's strong macroeconomic fundamentals, despite persisting external headwinds, including an extra 50% US tariffs on Indian exports, he yield on 10-year benchmark government securities inched up 10 basis points over the past one month to close at 6.41% on Thursday, but it still remained 45 basis points lower than a year yield has risen in recent weeks over concerns about lower-than-expected direct tax collections, over-supply of papers and fading hope of an interest rate cut in October, according to central bank has trimmed the repo rate by 100 basis points since February to 5.5% now. The focus has now shifted to a robust growth outlook, as reaffirmed by S&P, surplus liquidity in the system and overall supportive monetary policy settings will have a positive impact on the G-sec yield, the official said.S&P expects a strong annual growth rate of 6.8% for India for the next three years, with a 6.5% expansion in inflation hit an eight-year low of 1.55% in July. Lower inflation will ease the pressure on the RBI to maintain supportive monetary policies in the coming quarters, S&P has said."(Moreover) The fact that S&P also thinks the US tariff impact will be manageable, given India's relatively less reliance on external trade for growth, should also soothe nerves of investors," said another monsoon rains have been plentiful, and global crude oil prices have retreated to $67 per barrel after a brief surge in the aftermath of the Israel-Iran conflict, and could stay subdued for the rest of FY26 amid expected steady supply. All these would weigh down the bond yield, officials government won't flood the market with its securities and private players won't be crowded out, officials told ET recently. The Centre plans to stick to its FY26 gross market borrowing target of ₹14.82 lakh crore to avoid negative surprises, they had it has sharply hiked the capex allocations for the ministries of railways and road transport & highways in recent years. So, it's not using entities linked to these ministries to garner extra-budgetary resources, reducing pressure on the too, have been promised ₹1.5 lakh crore in capex loans by the Centre from its budget in FY26. This reduces their market borrowing needs proportionately.
Mint
4 hours ago
- Mint
Dow briefly hits record high on UnitedHealth boost; Trump-Putin meeting in focus
Indexes: Dow up 0.3%, S&P 500 down 0.11%, Nasdaq off 0.27% UnitedHealth surges after Berkshire Hathaway investment Bank of America shares down on Berkshire share sale Applied Materials drops on weak China demand forecast Investors monitor Trump-Putin summit at Alaska By Johann M Cherian, Sanchayaita Roy and Saeed Azhar Aug 15 - The blue-chip Dow briefly hit a record high on Friday, as UnitedHealth's shares jumped after Berkshire Hathaway raised its stake in the health insurer, while investors assessed mixed data to determine the Federal Reserve's next monetary policy move. A meeting between U.S. President Donald Trump and Russian counterpart Vladimir Putin was also on the radar, with markets hoping it could pave the way for a resolution to the Ukraine conflict and determine the outlook for crude prices. The meeting is scheduled to take place at 1900 GMT. UnitedHealth Group gained almost 14% and was on track to log its biggest daily rise since 2008 after Warren Buffett's company revealed a new investment in the health insurer, while Michael Burry's Scion Asset Management also turned more bullish on the company. Rising costs in the broader healthcare sector and about a 40% slump in UnitedHealth's shares this year have left the Dow lagging its Wall Street peers on the road to record highs. The price-weighted index last scaled an all-time high on December 4. The healthcare sector gained 1.8% on Friday and is on track for its best weekly performance since October 2022. At 2:04 p.m. the Dow Jones Industrial Average rose 134.90 points, or 0.30%, to 45,046.70, the S&P 500 lost 7.43 points, or 0.11%, to 6,461.11 and the Nasdaq Composite lost 57.72 points, or 0.27%, to 21,652.95. More broadly, Wall Street's main stock indexes are on track for their second week of gains, buoyed by expectations that the Fed could restart its monetary policy easing cycle with a 25-basis-point interest rate cut in September. The central bank last lowered borrowing costs in December and said U.S. tariffs could add to price pressures. However, recent labor market weakness and signs that tariff-induced inflation was yet to reflect in headline consumer prices have made investors confident of a potential dovish move next month. "The question is, has the tariff gotten into the price of goods yet? And it appears that there hasn't," said Joe Saluzzi, co-head of equity trading at Themis Trading. Saluzzi also said while markets have largely priced in a September rate cut, investors might be overlooking risks, with low volatility and rich valuations pointing to a sense of complacency. In a mixed day for economic data, a report showed retail sales in July rose as expected, but consumer confidence and factory production numbers indicated tariffs were taking a toll on other pockets of the economy. Chicago Fed President Austan Goolsbee was also cautionary in his remarks. Trump has said he will unveil tariffs on steel and semiconductors next week. Among other stocks that were on the move, Applied Materials tumbled 14% after the chip equipment maker issued weak fourth-quarter forecasts. Shares of Bank of America dropped 1.4% after Berkshire Hathaway reduced its stake in the second-biggest U.S. lender by 4.2% to 605.3 million shares. It still owns about an 8% stake in BofA. Intel surged 5.7% after a report said the Trump administration was in talks for the U.S. government to potentially take a stake in the chipmaker. Declining issues outnumbered advancers by a 1.22-to-1 ratio on the NYSE. On the Nasdaq, declining issues outnumbered advancers by a 1.29-to-1 ratio. The S&P 500 posted 10 new 52-week highs and no new lows, while the Nasdaq Composite recorded 77 new highs and 72 new lows. This article was generated from an automated news agency feed without modifications to text.
