Moody's Investors Services has reaffirmed the Ba2 foreign currency issuer rating of IFCI.
Earlier in July 2001, the rating agency had put the term lending institution on review for a downgrade following a delay in payment of local currency obligation, which could have led to difficulties in servicing the company's foreign currency obligations.
The rating agency said, "While confirming the Ba2 rating, which is the ceiling for foreign currency debt in India, it relied on government support being given to the institution as and when needed to meet its foreign currency obligation."
The rating agency said despite the recent recapitalisation of IFCI of Rs 1,000 crore from the government and other public sector institution, the term lending institution still faces severe liquidity problems and hence still have problem in repaying principal amount of its local currency bonds.
It said, "There have been instances when IFCI has failed to repay the principal amounts on time as it negotiated with the institutional holders of debt instrument to roll over the amount at lower interest rates. The institution's liquidity crunch is the result of its poor asset quality and generally weak financial position."
