S&P ups Power Finance to BB+

Standard & Poor's said it raised its long-term foreign and local currency issuer credit ratings for India's Power Finance Corp. Ltd. to BB+ from BB.

The outlook is stable.

The ratings are supported by good capitalization, solid profitability and government support; the company's rating derives support from its sole owner, the government of India (BB+/stable/B) because of its role as the main government agency for financing the electricity sector, the agency said.

These factors are partly offset by weak asset quality and asset concentration. The utilities consistently report operating losses and often face cash flow difficulties, S&P said.

Thus, while declining from a peak of Rs.270 billion in fiscal 2002, state government electricity sector losses are still significant at an estimated Rs.600 million in fiscal 2004.

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