MUMBAI: There has been a spike in downgrades and rating suspensions on debt papers of listed companies in the second half of fiscal 2019, indicating a deterioration in corporate health, data from the Reserve Bank of India's (RBI) financial stability report (FSR) show.
Tighter liquidity and a slowdown in the economy are now reflecting in the number of downgrades, analysts said.
In its report, the RBI said that there has been an increase in the share of downgraded/suspended compa ..
Madan Sabnavis, chief economist at Care Ratings, said the higher number of downgrades and suspensions reflect the current economic scenario.
"For Care, the number has been high because we rate a lot of small and medium enterprises which have borne the brunt of the economic slowdown which has been reflected in the downgrades," Sabnavis explained.
Data released in May showed that India's economic growth rate had fallen to a five-year low of 5.8 per cent in the quarter ended March 2019, mainly due to slower growth in agriculture and manufacturing. Growth in the fiscal year ended March slowed to 6.8 per cent, down from the 7.2 per cent reported a year earlier. The growth was the slowest since 2014-15.
Ratings downgrade have also been preceded by a liquidity squeeze for non-banking financeNSE -0.75 % companies (NBFCs) which along wi ..
Tighter liquidity and a slowdown in the economy are now reflecting in the number of downgrades, analysts said.
In its report, the RBI said that there has been an increase in the share of downgraded/suspended compa ..
Madan Sabnavis, chief economist at Care Ratings, said the higher number of downgrades and suspensions reflect the current economic scenario.
"For Care, the number has been high because we rate a lot of small and medium enterprises which have borne the brunt of the economic slowdown which has been reflected in the downgrades," Sabnavis explained.
Data released in May showed that India's economic growth rate had fallen to a five-year low of 5.8 per cent in the quarter ended March 2019, mainly due to slower growth in agriculture and manufacturing. Growth in the fiscal year ended March slowed to 6.8 per cent, down from the 7.2 per cent reported a year earlier. The growth was the slowest since 2014-15.
Ratings downgrade have also been preceded by a liquidity squeeze for non-banking financeNSE -0.75 % companies (NBFCs) which along wi ..
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