KOCHI: In a move that will give an independent global view of Kerala’s state of finances and its economy for foreign funds, international rating agencies S&P Global Rating and Fitch Ratings will rate the state’s all major socio-economic parameters including its economy, health sector, social security, pension liabilities, etc.
Global rating agencies such as S&P, Moody’s are known for giving country or sovereign rating, which are crucial for those looking to invest in a country. However, this is the first time that a state in India is getting a global rating.
The officers from the two global rating firms will be in Thiruvananthapuram, on June 7 and 8, where they will meet the Chief Minister, Finance Minister, Chief Secretary, among others, to study the state on various parameters.
Senior Finance Department officers said the move to undertake a comprehensive 360-degree rating of the state is to help government-owned Kerala Infrastructure Investment Fund Board (KIIFB) to mobilise funds from the overseas markets through the masala bonds.
“Initially, the plan was to get a rating done only for KIIFB and the specifically the masala bonds. However, S&P and Fitch Ratings insisted they wanted to do an overall rating of the state, which will help the foreign institutional investors (FIIs) to get a good idea about the state’s financial, infrastructure, health and other sectors, before investing in the bonds,” a senior officer in the Finance Department told Express.
Some of the parameters that the S&P and Fitch officers will look into include the impact of the changed Terms of Reference (ToR) of the Finance Commission on the state’s finances, the Ways and Means System, the pension liabilities of the state and other PSUs etc.KIIFB recently received A+ rating for a domestic borrowing programme.
“The interest rates were on the higher side, and hence we did not launch the domestic bond issue,” said the officer. KIIFB’s `5,000 crore masala bonds are aimed at Foreign Institutional Investors (FIIs), and the interest rate scenario is favourable now.
“We have `4,000 crore at our disposal now. But, we are also seeing fund utilisation at a fast pace for various ongoing infrastructure projects. The `5,000 crore will be raised over a period of 10 years. If we get `200 crore now, we will take that, and again hit the market later,” the officer said.
Vital visit
The international agencies will rate Kerala on all major parameters
June 7 and 8 The dates on which the agencies’ officers will be in T’Puram