'Companies' rating downgrades improve in second half of 2012'
The rating downgrades stood at 9.5 per cent in H2 of 2012, which improved from 10.3 per cent in the same period a year ago, Icra said in a statement here.
However, downgrades are still at an elevated level, the agency said.
More than half of the companies downgraded began the reporting period (July 2012) with a non-investment grade rating, Icra said in a report.
"The difficulties in the operating environment also impacted the credit profiles of borrowers in the lower investment grades."
A slew of factors, both domestic as well as international, have been blamed for the gloomy economic scenario and India's GDP growth is expected to fall to 5.5 per cent levels a decadal low, this fiscal.
The sectors which witnessed the maximum downgrades included textiles, power and power-related infrastructure firms, engineering companies, hotels and auto ancillaries, it said, adding the upgrades were not sector-specific but driven by company-specific factors.
"An improving economic outlook and moderation in inflation could alleviate the pressures on the credit profiles of companies," it said, adding going forward, the trend of a slowdown in rating downgrades is likely to continue.
A moderation in inflation which will lead the RBI to soften its rates and hence bring down borrowing costs for companies, the rating outfit said.
However, the agency maintained a negative credit outlook on sectors like metals and mining, construction, power and capital goods.
Be the first to comment.