New Delhi: Moody's Investors Service on Friday lowered the outlook on the rating of six Indian financial institutions, including State Bank of India, HDFC Bank, and Housing and Urban Development Corp Ltd, to negative from stable.
It also lowered the rating outlook for Hero FinCorp Ltd, Export-Import Bank of India, and Indian Railway Finance Corp Ltd.
The downward revision in the rating outlook for the financial institutions comes after the agency lowered the outlook on India's sovereign rating to negative from stable earlier on Friday.
The ratings of SBI, EXIM India, HUDCO, and IRFC are at Baa2, the same as the sovereign rating, on the assumption that these companies will receive government support in times of need.
Consequently, the ratings of these four companies will be downgraded if the sovereign rating is lowered, Moody's said.
"The close links between the four companies and the government of India is the key reason why Moody's has changed the outlooks for these companies to negative from stable," it said.
As for the change in outlook for HDFC Bank, Moody's said the rating of a bank is capped at the sovereign rating of the country that it operates in given the strong linkages.