Mumbai, Nov. 23: Reliance Industries Ltd has got thumbs up from the two leading global credit rating agencies ? Moody’s and Standard and Poor’s.

After Moody’s Investors Services, Standard & Poor’s Ratings Services today patted Reliance Industries Ltd.

It has upgraded Reliance’s long-term foreign and local currency bonds ratings to BBB from BB+ with a stable outlook.

S&P said the upgrade reflected Reliance’s competitive position in refining and petrochemicals, its divestment of capital-intensive non-core telecom and power businesses, and an overall moderate financial profile. The rating has also factored in the demerger of the Reliance business, which was approved by shareholders.

According to S&P, although there was no cash outflow from Reliance due to the demerger, the timely completion and continuity of the arrangement was critical for the outlook and ratings.

“With a prominent share of exports, high degree of integration with the international capital markets, and positive free cash flow, Reliance meets Standard & Poor’s revised criteria for assigning non-sovereign issuers foreign-currency ratings higher than those of the sovereign, which in this case is India (BB+/Stable/B). Reliance is also expected to retain these attributes under stress conditions like adverse currency movements,” the rating agency added.

Credit analyst Anshukant Taneja, however, cautioned that the ratings are constrained by Reliance’s exposure to highly cyclical industries, large capital commitments in refining, exploration and production businesses, and uncertainties in developing its reportedly large gas reserves.

S&P also took into account Reliance’s Rs 61,700-crore capital expenditure plan, given the potential softening of the petrochemical cycle, reduced demand for refined petroleum products, and uncertainties related to its upstream gas business.

“Lower-than-expected cash flows for funding a part of the capital expenditure could mean still higher borrowings, which would weaken the company’s credit protection measures,” Taneja said. However, the petrochemical firm’s fiscal position, strong liquidity and access to financial resources did mitigate some of these risks, he added.

Last week, Moody’s had upgraded Reliance’s foreign currency bonds rating to Baa3 from Ba2 and assigned a local currency issuer rating of Baa3. The agency had also indicated that if the demerger plan goes through by April, both ratings could also be upgraded to Baa2.

Moody’s said its move to upgrade the ratings on Reliance was prompted by the company’s continued strong operational and financial profiles. Its fiscal position was supported by the dominant market position in refining and petrochemicals, the benefits of economies of scale, low-cost integrated operations, strong level of domestic demand and a favourable outlook for the petrochemicals industry in the next 12-18 months.