Ratings agency Fitch has assigned a moderate rating with a stable outlook to the Rs 75 crore fund instruments of Andhra Pradesh State Finance Corporation, on the back of the company's strong link with the state government.
"Fitch Ratings has assigned Andhra Pradesh State Finance Corporation's (APSFC) Rs 75 fund-based limits a 'BBB+(ind)' rating with stable outlook," it said in a statement.
The 'BBB' ratings denote a moderate default risk relative to other issuers.
Fund-based limit is a limit in which the company is getting money actually in hand in form of cash credit or term loan, unlike in non-fund based limit where the bank pays on behalf of the company.
Fitch said the rating reflects APSFC's strong linkages with the state government apparatus.
"The rating draws substantial support from APSFC's government ownership and its strategic and operational ties with the government of Andhra Pradesh," it said.
Andhra Pradesh has been regularly injecting funds into APSFC which was established in 1956 as a term lending institution to promote micro, small and medium enterprises in the state.
The corporation increased its lending to Rs 1,724 crore in the last fiscal from Rs 1,536 crore in 2008-09.
"The corporation trimmed down its net non-performing loans/net loans and advances to 5.53% in FY10 from 16.14% in the previous fiscal, due to cautious disbursements and aggressive write-offs and recoveries," Fitch added.