Showing a deteriorating debt profile of Indian companies, more than half of the credit ratings assigned to them by various agencies in the first quarter of this fiscal have been of 'non-investment grade'.
According to the latest data available with Sebi, which regulates Credit Rating Agencies, CRAs assigned 497 ratings for long-term corporate debt securities during the first three months of current fiscal.
Of these, as many as 261 ratings were of 'non-investment grade', while only 42 securities could get the 'highest safety investment grade (AAA)'.
However, these 42 AAA-rated issues together involved an amount of about Rs 4 lakh crore, as against a total amount of just about Rs 4,000 crore for 261 issues that were assigned 'non-investment grade' ratings.
A 'non-investment grade' applies to relatively low- quality bonds that face the highest risk of default. Debt securities are issued by companies to raise funds for a variety of purposes such as business expansion.
According to Sebi data, CRAs assessed long-term corporate debt securities worth Rs 4.82 lakh crore till June in the current fiscal.
While 261 were of 'non-investment grade', the remaining 236 had investment grade ratings with highest-to-moderate safety profile. These included 72 with high-safety (AA), 35 with 'adequate safety (A)' and 87 with 'moderate safety (BBB)' ratings.
In the April-June period of the previous fiscal, a total of 1,343 issues worth Rs 4.60 lakh crore were graded, of which 921 issues valuing Rs 14,611 crore were categorised under the 'non-investment grade'.
Meanwhile, only 30 rating downgrades were accepted by the respective companies, as against 56 upgrades in the first three months of current fiscal. This is the lowest number of ratings accepted by the companies in the last five years.
As per the process followed by credit rating agencies, the assigned rating is communicated to the issuer for acceptance. In the case where the issuer does not find the rating acceptable, it can appeal for a review.
The rating agencies registered in the country include Crisil, India Ratings and Research (formerly Fitch Ratings India), Icra, Credit Analysis & Research (CARE), Brickwork Ratings India and SME Rating Agency of India.