Mumbai: India Inc has turned the corner of distress with their debt securities receiving positive ratings overall. According to Sebi, as many as 852 of 952 long-term corporate debt securities were rated to be investment grade.
This is good news compared to a Crisil rating agency report that had in April 2016 said debt of firms downgraded by Crisil in its universe of companies in fiscal 2016 has risen to an all-time high of Rs 3.8 lakh crore, underscoring that credit quality pressures continue to mount for India Inc.
More than half of this debt belonged to firms in metal sector, which were hit by falling realisation and high debt. And the second-biggest chunk of about a quarter belonged to the infrastructure sector.
Somasekhar Vemuri, senior director, Crisil, had observed then that “debt under stress at infrastructure and metal-linked firms is at a record level because there hasn’t been any meaningful deleveraging of balance sheets, and metal prices continue to be low.” These perhaps formed the 100 issues in 2015-16 that Sebi report found to be of ‘non-investment grade’.
Sebi has taken the ratings of besides the widely reported Crisil, ICRA, CARE and India Ratings and Research Brickwork Ratings India and SMERA Ratings.
According to the Sebi report quoted by PTI, whilst between 2011-12 and 2014-15 barely between 36-44 issues met the investment grade category in 2014-15, the investment grade ratings took an upturn when about 61 per cent of the debt issues were assig-ned investment grade. In 2015-16 this figure touched 89.5 per cent.
During 2015-16, 852 debt issues had investment grade ratings with highest-to-moderate safety profile. These included, 309 debt issues worth '1.93 lakh crore with ‘high safety (AA)’, 178 issues ('10.3 lakh crore) as ‘highest safety (AAA)’, 214 issues ('40,889 crore) were assigned as adequately safety (A) and 151 issues ('6,180 crore) were classified under ‘moderate safety (BBB)’ in 2015-16. Prior to the 2008-09 crisis nearly 79 per cent corporate debt issues were rated to be of investment quality, but the after effects of the 2008 crisis saw the credit profile of companies deteriorating.
