S&P ups Power Finance outlook to positive

Standard & Poor's said it revised India-based Power Finance Corp. Ltd.'s outlook to positive from stable and affirmed its BB+ long-term issuer credit rating.

The agency said the revised outlook reflects the outlook on the sovereign credit ratings on India, which was revised to positive from stable to reflect the prospects of greater fiscal consolidation across all levels of the government.

The ratings on Power Finance are supported by strong government support, good capitalization and profitability, the agency said. Its ratings derive support from its sole owner, the government of India, because of its role as the main government agency for financing the electricity sector.

S&P said the ratings are constrained by Power Finance's weak asset quality and high asset concentration. Furthermore, the agency said state governments and their electricity utilities have poor creditworthiness, and the utilities consistently report operating losses and often face cash flow difficulties.

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