House of Debt’s bigger in FY15

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Updated: November 9, 2015 1:11:37 AM

As FE reported recently, financial stress at ten business groups has intensified in the three years since Credit Suisse’s first House of Debt report was released.

As FE reported recently, financial stress at ten business groups has intensified in the three years since Credit Suisse’s first House of Debt report was released. Despite attempts at deleveraging, these groups saw further increase in debt in FY15 (5%). The rising stress is evident in multiple instances of default over the past year, with 40-65% of debt for four groups (Jaypee, Lanco, Essar and GMR) having been downgraded to default by rating agencies.It is estimated that 20-90 % of debt (aggregate $48 bn) for some groups is facing severe stress. In addition, with 15-60 % of the debt being in foreign currency, their debt-servicing outlook remains an area of serious concern. Banks have also reported their exposure to corporates vulnerable to currency depreciation in their annual reports—this exposure amounts to 15-57% of banks’ net worth. In more bad news, some of the groups have 5-50% of their long-term debt ($15 bn) maturing within the next year and would need refinancing.

Gr7

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