Most firms can withstand rupee fall: S&P report
Most domestic corporates can withstand the ongoing rupee plunge as the share of their dollar-linked earnings largely balances the share of their green back de nominated debt, says an S&P report. The rupee fell beyond ~70 to the dollar, closing at an all-time low of 70.15 on Thursday.
Most domestic corporates, barring a few, can withstand the ongoing rupee plunge as the share of their dollarlinked earnings largely balance the share of their greenback-denominated debt, says a report.
The rupee fell beyond ~70 to the dollar, closing at an alltime low on Thursday at 70.15, while on Friday the market was closed. So far, the rupee has lost close to 9 per cent, making it one of the worst performers among the large currencies.
“A weaker and more volatile rupee would likely result in increased hedging costs for companies, while the same may benefit exporters,” an S&P report said on Friday.
“Most corporates can withstand the rupee plunge as the share of their dollar-linked earnings largely balance the share of their greenback-denominated debt. A few of them will be negatively affected, but not severe enough to impact their credit ratings,” S&P said.
The report said it expected the credit profile of rated infrastructure companies to be largely protected from the current bout of rupee depreciation. While regulated utilities (like NTPC, Power Grid, and NHPC) enjoy cost passthrough for currency depreciation or hedging costs, unregulated power companies are protected due to hedged forex bonds. But Delhi airport and Hyderabad airport will benefit from forex earnings as well as hedging.
“We thus believe the impact on infrastructure sector will be limited,” the agency said.