InvestorQ : What was the reason for Moody’s downgrading the ratings of ONGC?
Deepa Salunkhe made post

What was the reason for Moody’s downgrading the ratings of ONGC?

Answer
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Juvina Maggie answered.
6 months ago


The downgrade of ONGC was long on the cards after its financials had deteriorated substantially post the acquisition of HPCL. Moody’s has downgraded ONGC’s ratings on the back of continued uncertainty over crude oil prices. Crude oil has fallen sharply from $64/bbl to $26/bbl in less than 3 months. Moody’s has also raised concerns over the depleting cash reserves of ONGC and the government policy that does not allow ONGC to reduce its dividends. It has also been unconvinced with the argument for HPCL purchase. ONGC’s local and foreign currency ratings have been downgraded from Baa1 to Baa2. Despite weak cash position, ONGC paid out Rs.6300 crore as dividends, depleting its cash reserves further.