How Indian credit rating agencies missed an epic fail at IL&FS Group

Indian credit rating industry has come under scrutiny after the firms that assessed IL&FS, including the local partners of Moody's Investors Service, failed to see the financial troubles brewing

Indian authorities have spent the week containing the collateral damage from a major infrastructure lender struggling to service $12.6 billion in debt. Next up: Figuring out why the nation’s credit rating agencies didn’t see the crisis coming.

IL&FS Group is a vast conglomerate with a complex corporate structure that funds infrastructure projects across the world’s fastest-growing major economy. The financier, set up in 1987, and its listed subsidiaries have powered India’s infrastructure boom-- including the Chenani-Nashri road tunnel, India’s longest--and raised billions of dollars from the country’s corporate debt market.

In July, company founder Ravi Parthasarathy stepped down, citing health reasons. In