India's Investment Grade Rating Threatened by S&P

India may be the first BRIC nation to loss its investment grade rating — a blow to both its prestige as a growth economy and perhaps its ability to raise money. S&P shocked may sovereign investors as it produced a report, “Will India Be the First BRIC Fallen Angel?” which said:

[T]he Indian government’s reaction to potentially slower growth and greater vulnerability to economic shocks could largely determine whether the country can maintain an investment-grade rating or become the first “fallen angel” among the BRIC nations (which also comprise Brazil, Russia, and China). The “BBB-” long-term sovereign credit rating on India is currently one notch above speculative grade. “Setbacks or reversals in India’s path toward a more liberal economy could hurt its long-term growth prospects and, therefore, its credit quality,” said Standard & Poor’s credit analyst Joydeep Mukerji.

If India does lose its current rating, S&P could turn to other BRIC nations like Brazil and Russia to see if they share enough in common with India to be reexamined.

Douglas A. McIntyre