According to CRISIL, the Indian arm of Standard & Poor which rates over 9,000 issuers in India, credit ratings have fallen the most in three years compared to the upgrades. This comes in the wake of Reserve Bank of India trying to fight the menace of inflation by rate tightening and hence eroding the corporate profits.
According to the data compiled by Bloomberg, the average earnings of 179 Indian companies fell by 29% in the first quarter. Adding to this, CRISIL expects the pressure on the Indian bank's asset quality to continue as companies that have borrowed loans from the banks seek to restructure debt.
Only nine companies had ratings increased in the first quarter, compared with 16 cuts, giving a ratio of 0.56, the lowest since the third quarter of 2009. That compares with 0.72 for U.S. companies assessed by S&P, the data show.
Vedanta Aluminum, Great Offshore and 18 other companies had their grades lowered this year.
In the mean time, Indian companies have sold off a total of Rs 632 billion debt thus far as compared to Rs 422 billion in the same period last year, according to the data compiled by Bloomberg. Ten year bond yields for top rated companies shot upto 9.60% in the month of April, its highest since the start of 2012.
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