Brickwork Ratings has downgraded credit ratings of government-owned specialised financial institution IFCI Limited's long-term debt instruments, non-convertible debentures and bonds from BWR A minus to BBB plus with a negative outlook.
At the same time, IFCI's commercial papers have been downgraded from BWR A1 to A2 plus, IFCI informed stock exchanges in regulatory filings on Wednesday.
"The rating downgrade takes into consideration the decline in asset quality as indicated by an increase in gross non-performing assets as on March 31, stressed liquidity position, declining asset base, weakening in earning profile, decline in capital adequacy much below the stipulated benchmark, concentration risk visible in the asset base and fresh slippages during the year," Brickwork said.
The rating also takes into account the large payout in the form of debt repayment during the current year. These risks are partially offset by sovereign ownership of the company with a proven track record of capital infusion in the past, improvement in asset quality of the incremental portfolio owing to the improved procedures and increase in recoveries.
The move comes as IFCI prepares to garner about Rs 3,000 crore during the current fiscal by selling stake in the National Stock Exchange, Clearing Corporation of India and Stock Holding Corporation of India.
Last month, ICRA downgraded IFCI's credit rating from BBB+ to BBB with negative outlook.
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