Moody’s rates ONGC Videsh bonds Baa2

Moody's Investors Service said it assigned a provisional Baa2 to the proposed issuance of foreign currency senior unsecured bonds by ONGC Videsh Ltd., a wholly owned subsidiary of Oil and Natural Gas Corp. Ltd.

The bonds will be unconditionally and irrevocably guaranteed by Oil and Natural Gas.

Proceeds will be used to refinance the bridge loans for the acquisition of stake in Rovuma Basin in Mozambique.

At the same time, Moody's affirmed Oil and Natural Gas’ Baa1 local currency issuer rating, Baa2 foreign currency issuer rating and the Baa2 ratings on the senior unsecured bonds issued ONGC Videsh and guaranteed by Oil and Natural Gas in 2013.

The outlooks are stable.

"ONGC's issuer rating reflects its strong credit metrics, even after increase in its borrowings following the recent acquisitions in Mozambique and also after the decline in its cash flows following the increase in its fuel subsidy burden," Moody's vice president and senior credit officer Vikas Halan said in a news release.

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