S&P affirms IIFCL's rating at 'BBB-'; keeps outlook stable

S&P Global Ratings has further slashed its FY21 GDP growth forecast to 3.5 percent from a previous downgrade of 5.2 percent. (Image: Reuters)

Global rating agency, S&P, on Monday affirmed India Infrastructure Finance's (IIFCL) long-term issuer credit rating at 'BBB-', on higher government support to the infrastructure financier in case of distress.

The rating agency also kept the state-run financial institution's outlook as stable.

"It reflects our assessment of an almost certain likelihood of extraordinary government support for IIFCL in the event of financial distress," the rating agency said in a note.

The rating on IIFCL in a sense, mirrors the sovereign credit rating on the country, it said.

IIFCL is a government-related entity acting under the directives of the ministry of finance (MoF) and the government.

The institution continues to play a critical role in the government's economic development plans and policies over the next 24 months, the note said, adding "It will remain a key policy instrument to promote infrastructure financing."

IIFCL's activities signal the critical role the government sees itself as providing in helping to achieve faster financial closure for infrastructure projects, it said.

"In our view, the 2018-2019 budget announcement to expand the scope of projects that IIFCL can lend to further deepens the public policy role," the rating agency said.

IIFCL's rating could be upgraded if the agency raises the rating on the sovereign and the company continues to perform the same level of service to the government, the note added.