In This Issue: India: Back In Investment Grade After 16 Years: On Jan. 30, 2007, Standard & Poor's raised its sovereign credit ratings on the Republic of India to 'BBB-/A-3'. The upgrade to investment grade reflects the country's strong economic prospects and external balance sheet, and its deep capital market, which supports a weak, but improving, fiscal position.Opportunity Knocks For India's Banks As Strong Growth Continues: India's economic prospects remain stable and strong, with GDP growth likely to average more than 7.5% in the medium term. Economic growth is also benefiting from higher consumption and private investment demand, owing to a growing middle class and favorable demographics. As a result, Indian banks will have abundant opportunities for profitable growth, with minimal downward pressure on pricing or asset quality. India's Global M&A Ambitions May Weaken Credit Risk Profiles: India's corporate landscape could see a year of record M&A deals in 2007, with companies actively considering nonorganic growth options. The number of M&As surged over the past three years, rising 26% in 2006 to 349 (from 276 in 2005), valued at US$11.9 billion. The rising tide of M&As has yet to affect credit risk profiles of Indian corporates significantly. India Top 100 Corporates Overview: Satisfactory Financial Profile Expected To Continue: Operating in an environment of strong economic growth for the past four years, the Indian corporate sector has demonstrated a trend of consistent double-digit revenue growth. The trend is evident across a broad spectrum of industrial sectors, notably software and IT services and automotive sectors. In 2006 alone, foreign direct investment flowing into India increased by 43.9% to US$9.5 billion. Indian Pharmaceutical Industry: Generics In The Pink Of Health: India's pharmaceutical industry ranks fourth in the world in volume and 13th in value terms. Keeping the sector healthy is the dominance of branded generic medicines-the proportion of innovative drugs that are still under patent is low. The size of the industry is about US$5.6 billion (INR250 billion), which is expected to grow 8% to 10% annually. | 
