Moody's: Indian Oil notes Baa3

Moody's Investors Service said it assigned a provisional Baa3 senior foreign-currency debt rating to Indian Oil Corp. Ltd.'s proposed dollar-denominated notes and affirmed the company's issuer rating at Baa3. The outlook is stable.

The agency said the Baa3 rating is supported by the company's strategic importance to India because of its position as the country's largest refiner and distributor of petroleum products, its ability to borrow in the domestic market without financial covenants and the government's majority ownership.

In Moody's view, these strengths are partially offset by Indian Oil's high financial leverage resulting from high fuel subsidies and its relatively low complexity refineries that generate lower refining margins.

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