Icra downgraded the long-and medium-term ratings of its principal promoter IFCI on Wednesday. The ratings have been revised from `LAAA' and `MAAA' to `LAA+' and `MAA+' signifying a move from `higest safety' to `higher safety'. However, Icra has retained the highest safety rating for IFCI's short-term debt.

IFCI's outstanding rupee debt is pegged at Rs 16,407 crore while the quantum of forex debt is Rs 3,713 crore as on March 31, 1999. Icra has rated Rs 12,900 crore worth of debt out of which Rs 8,100 crore accounts for long-term debt, Rs 2,800 crore for medium-term and the rest for short-term debt.

With Icra attributing the IFCI downgrade to deterioration in the business conditions consequent to economic slowdown which have adversely affected theasset quality of the term lending institution, financial sector sources feel that either their rating parameters are not applied uniformly or financial conditions at IFCI have really deteriorated.

While the decline in asset quality and debt servicing (as a result of the sluggish economy) is visible across the financial sector, it is more pronounced with the NBFCs. So, the downgrade of a term-lending institution from a `AAA' status and retaining a clutch of NBFCs in that bracket (AAA) suggests that firms like First Leasing Company of India and ILFS offer a safer bet than a Government of India backed institution, they added. Both First Leasing and ILFS have outstanding long term ratings of `LAAA'--one notch higher than that of the term-lending institution IFCI.

Meanwhile, a comparative analysis between the ratings given to some NBFCs by two leading rating agencies--Crisil and Icra-- reveals that as of March 31, 1999, Icra has rated them higher by an average notch difference of 1.57 in case of the 23companies which have got their fixed deposit programmes rated by both agencies. In case of another set of 13 companies which have got long-term ratings from both Crisil and Icra, Icra's ratings have been higher by an average notch difference of 2.17.