CRISIL downgrades exceed upgrades in Q3

Mumbai: Rating firm CRISIL has downgraded ratings of more entities in the third quarter of the current financial year against the number of entities it upgraded during this period.

While the rating firm downgraded 148 entities in the quarter ending December, it upgraded 138 entities, a press release said.[caption id=“attachment_184197” align=“alignleft” width=“380” caption=“World of ratings. Image courtesy Crisil”]  [/caption]

This has decreased the rating action ratio (RAR), which is an indicator of the relative frequency of upgrades to downgrades, to 0.99 times in the third quarter from 1.11 times for the same period last year, the release said.

As per the research firm, one-third of the downgrade was caused by pressure on demand or profitability and another third of the downgrade was the result of weakening liquidity.

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“Our downgrades have outnumbered upgrades for the first time in eight quarters. A sizeable proportion of downgrades has been in the textile and construction industries,” CRISIL Ratings, director, Ramraj Pai said.

He also said that the pressure on credit quality would continue for domestic companies with downgrades exceeding upgrades in the near future.

“Corporate India continues to face challenges both in the domestic market, where there has been a slowdown in the economy with uncertainty looming large in Europe,” he said.

According to CRISIL estimates, around USD 17 billion foreign currency debt will come for repayment in the next 18-24 months.

PTI