India’s devastating COVID-19 crisis is making investors question more than ever whether after years of debt accumulation and patchy progress on reforms, a country touted as a future economic superpower still deserves its ‘investment grade’ status. A spate of downgrades last year had already left India’s investment grade credit ratings hanging by a thread and the severity of the current virus wave is making the main agencies, S&P, Moody’s and Fitch agitated again. All three firms have either cut – or warned they could cut – the country’s growth forecasts in recent weeks and that government debt as a share of GDP will jump to a record 90% this year. The median debt level for countries Fitch has in the BBB bracket – India is BBB- – and on a downgrade warning with both Fitch and Moody’s – is currently around 55% and only 70% even for those languishing at the lowest depths of ‘junk’ grade. “We still see India as investment grade,” said NN Investment Partners’ head of Asian Debt, Joep Huntjens, who thinks the country’s economy will bounce back quickly. “But we do think there is at least a 50/50 chance that at least one rating agency downgrades, probably next year”. ANOTHER BRIC TO FALL? Neither India’s finance ministry nor its central bank responded to requests to discuss the risk of a downgrade but, as Brazil and South Africa have experienced, becoming a ‘fallen angel’ – as a demotion to junk is known in rating agency parlance – can set off a wave of problems.