Mumbai, Feb. 1: Moody’s Rating Services today gave a top-drawer credit rating to Oil and Natural Gas Corporation (ONGC). The rating places ONGC on a par with China National Offshore Oil Corporation and a couple of notches above India’s sovereign credit rating.

Moody’s gave ONGC an indicative foreign currency debt rating of Baa1 and local currency issuer rating of A2 with a stable outlook. These are the highest-ever credit ratings assigned by the international agency to any Indian company.

The remarkable aspect of ONGC’s foreign currency debt rating is that it is two notches higher than the sovereign credit rating of India. The local currency issuer rating is six notches above the sovereign local currency rating.

The credit rating exercise was initiated by ONGC to facilitate borrowing in domestic as well as overseas markets to fund its growth plans. The overseas opportunities being pursued by the corporation through its wholly-owned subsidiary, ONGC Videsh, may require sourcing of substantial funds at short notice.

The corporation’s need for funds is projected to rise because of its domestic investment plans. The ratings are expected to help ONGC ensure on-time availability of the required funds, in rupees or in foreign currency.

Moody’s said while assigning the A2 local currency rating, it has taken into account the corporation’s dominant position in the oil and gas industry in India, its substantial asset base and operation scale, competitive cost position as well as strong credit measures and solid liquidity position.

It added that at the same time, the credit assessment also incorporated the regulatory uncertainties surrounding India’s subsidy-sharing mechanism, the large capex programme, as well as customer and asset, production concentration risk.

“Furthermore, event and execution risk are heightened in view of the company's acquisitive/growth strategy, particularly with regard to its ambitions for overseas expansion,” Moody’s added.

The high support reflects ONGC’s national importance and strategic role in economic development, translating into high incentives for government support, it said.

ONGC accounts for over 75 per cent of total proved reserves in the country. According to Moody's, it has a globally competitive cost structure, providing an important cushion against a low oil price environment.