Fitch assigns stable outlook to IOC

New Delhi, Dec 26 (UNI) Fitch ratings today assigned a 'BBB-' Long-term foreign currency Issuer Default rating and an 'AAA(ind)' national long-term issuer rating to Indian Oil Corporation Ltd (IOC), reflecting its largest refining capacity, marketing network and pipeline infrastructure in the country.

The outlook on the ratings being stable, reflects Fitch's expectation that IOC, as the largest corporation in India, will maintain a credit profile appropriate for the rating category and will continue to be supported by the government.

The strong implicit support from the government is evident from the sharing mechanism, including the issue of oil bonds and direct subsidies to IOC and other public sector oil marketing companies to compensate for the losses ('under recoveries') caused by government's price caps on select fuels.

IOC's profitability is supported by its competitive refining margins and extensive pipeline network, reducing logistics costs.

The ratings take into account IOC's reduced debt protection measures over the last two years as a result of lower profitability due to under recoveries caused by government's fuel pricing policy.

IOC accounts for 41 per cent of the country's refining capacity at 132.5 million metric tonnes per annum (MMTPA) in FY06 and had a 47 per cent share of the country's refined products market in FY06.

It owns 51 per cent of the petroleum product pipeline capacity and 100 per cent of the crude oil pipeline capacity in the country.

UNI DKS CS KN1700