At a time when non-banking finance companies (NBFCs) are reeling under the pressure of higher cost of funds and deteriorating asset quality, credit rating agency Crisil has re-affirmed its ‘AAA’ rating on the long-term debt instruments of L&T Finance Holdings (LTFH), the NBFC arm of infrastructure major, Larsen and Toubro.
Crisil maintained its highest rating on Rs 500 crore worth of non-convertible debentures (NCDs) and re-affirmed its A1+ ratings on the NBFC’s commercial papers (CPs) amounting to Rs 1,500 crore.
“The rating reflects the group’s strong and diversified presence across the financial services space and a well-diversified resource profile. It also centrally factors in expectation of strong support from the parent, Larsen & Toubro,” said Crisil.
According to Crisil, L&T has provided an ongoing line of credit worth Rs 2,000 crore to LTFH and its subsidiaries which could be used in times of contingency.
The non-bank lender’s total borrowings as on June, 30 amounted to Rs 92,887 crore of which nearly 44% was borrowed from NCDs followed by bank borrowings, which amount to 38% of total borrowings.
“The diversified resource profile is also reflected in the competitive average borrowing cost of 8.45% in FY19, which is lower than most peers,” according to a Crisil.