Moody's Baa3 rating for IRFC

Moody's Investors Service has assigned a Baa3 foreign currency rating to Indian Railway Finance Corporation Ltd.

The rating reflects IRFC's successful niche franchise established through its role of arranging lease finances for the Ministry of Railways.

According to Moody's, the institution has managed to build a credible financial track record through this mission, as well as expertise in financing Indian Railways.

The rating also takes into account the institution's sole exposure concentration to Indian Railways and the tough challenge it is faced with in changing its business mix and diversifying its operations.

Around 86 per cent of IRFC's asset portfolio stems from Indian Railways in the form of lease finance receivable, leaving it vulnerable to a possible concentration risk from a single client - Indian Railways.  Nonetheless, Moody's notes that the financial standing of Indian Railways is quite strong, with a profitable performance over a number of years.

IRFC's full government ownership and the high likelihood that the government would support the institution were it to face any financial difficulties are also reflected in the rating.

Moody's does not expect any change in IRFC's ownership over the foreseeable future.