Indo-Pak Standoff Will Aggravate Credit Risks

New Delhi: S&P Global Ratings on Thursday said the hostilities between India and Pakistan heighten risks to the credit metrics of both countries, and any escalation in clashes would put downward pressure on sovereign credit support.

S&P, which rates India and Pakistan at ‘BBB-’ with a positive outlook and a ‘CCC+’ (outlook stable), said that in the current scenario, it does not see any immediate impact on sovereign credit rating and expects the tensions to remain high over the next two to three weeks, with significant further military actions on both sides possible.

“The outbreak of hostilities between India and Pakistan has increased regional credit risks, especially for the two sovereigns involved. Our base case is for the intense military actions to be temporary, which will give way to a longer period of contained and sporadic confrontations,” S&P Global Ratings said in a statement.

In a strong retaliation to the Pahalgam massacre, India’s armed forces early on Wednesday destroyed nine terror sites including that of Jaish-e-Mohammad and Lashkar-e-Taiba in Pakistan and Pakistan-occupied Kashmir (PoK). 15 days after the Pahalgam carnage in which terrorists killed 26 civilians, mostly tourists, in Pahalgam, India launched its military response codenamed ‘Operation Sindoor’ using deep strike missiles. Pakistan Prime Minister Shehbaz Sharif has said his country has every right to give a “befitting reply to this act of war imposed by India.”