What’s at Risk If India Is Cut to Junk? UBS Lists Out Scenarios

A cut in India’s sovereign rating to junk status may threaten the nation’s chances of being added to global bond indexes, steepen the bond yield curve and weaken the rupee, according to UBS Group AG, Bloomberg News reported. The Swiss bank expects S&P Global Ratings and Fitch Ratings to lower their outlook on the rating to negative from stable over the next couple of months, strategists led by Rohit Arora wrote in a June 3 note. Earlier this week, Moody’s Investors Service cut India’s rating to the lowest investment grade, putting it on par with S&P and Fitch at a level above high-yield. India’s aim to be part of global bond indexes will likely be undermined if two raters downgrade the nation’s rating. Read more