The share of downgraded listed debt issues reached a three-year high for two rating agencies, while the share of downgraded listed debt issues in total outstanding ratings decreased in the fourth quarter of 2020-2021 compared to quarters previous ones.
That’s what the Reserve Bank of India’s July 2021 Financial Stability Report revealed.
“On an aggregate basis, the share of downgraded listed debt issues in the total outstanding credit ratings decreased significantly during the fourth quarter of 2020-2021 compared to previous quarters, while the share of downgraded listed debt issues was at its highest level in three years. for both ICRA and CRISIL, ”FSR said.
For ICRA, revalued and reaffirmed listed debt issues were 99.8 percent in the fourth quarter of the previous year, while downgraded and suspended issues were 0.2 percent. This contrasts with only 88% of listed debt issues revalued and reaffirmed in the fourth quarter of 2019-2020.
Likewise, in the case of Crisil, the rated debt revalued and reaffirmed was 99.9% in the March 2021 quarter compared to 91.2% in the fourth quarter of 2019-2020.
For Care Ratings also, the revalued and reaffirmed listed debt issues reached 95.2% in the fourth quarter of 2020-2021, against 78% in the same period of the previous fiscal year.
“On the rating downgrades during the fourth quarter of 2020-2021, the share of the NBFC and housing finance companies as well as banking and financial services sectors has fallen considerably compared to the previous quarter,” added the FSR.
During the quarter ended March 31, 2021, NBFC rating downgrades represented 11.1% of overall downgrades for the quarter compared to 28.6% in the December 2020 quarter.
The share of banks and financial services in the downgrades was zero in the March 2021 quarter against 11.9% in the previous quarter.
The electricity sector recorded the largest share of downgrades during the March 2021 quarter at 38.9% against 38.1% in the previous quarter.