Moody’s downgrades Indiabulls Housing Finance ratings; outlook changed to negative

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Updated: August 14, 2019 6:50:52 PM

Rating agency Moody’s on Wednesday downgraded Indiabulls Housing Finance Limited's (IBH) long term corporate family rating from Ba1 to Ba2.

insolvency law amendments, credit positive, banks, Moody's, Moody's rating, IBC The rating agency changed the firm’s outlook from stable to negative owing to the possibility of tight funding conditions that may further pressure other aspects of firm’s credit profile, including profitability and asset quality.  (Reuters)

Rating agency Moody’s on Wednesday downgraded Indiabulls Housing Finance Limited’s (IBH) long term corporate family rating from Ba1 to Ba2. Even the foreign-currency senior secured rating was cut to Ba2 from Ba1, and foreign and local currency senior secured MTN program ratings was downgraded to (P)Ba2 from (P)Ba1. The rating agency changed the firm’s outlook from stable to negative owing to the possibility of tight funding conditions that may further pressure other aspects of firm’s credit profile, including profitability and asset quality.

“The downgrade reflects renewed pressure on the cost and availability of funds for IBH and certain other finance companies in India. This presents a more challenging external environment than Moody’s had anticipated,” rating agency Moody’s said in a report.

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“Since the rating is on a negative outlook, we do not expect the rating to go up over the next 12-18 months. The outlook could be changed to stable if the company is able to demonstrate improved access to funding. The company’s ability to sustain normal loan growth, achieve competitive funding costs, and access funding from institutional investors would provide indications of progress on this front,” Moody’s also said.

In April 2019, the company had announced a plan to merge with Lakshmi Vilas Bank, and get converted into a bank. This merger proposal is now awaiting regulatory approval from the Reserve Bank of India (RBI). Shares of Indiabulls Housing Finance ended the day at Rs 544.65, down 28.45 points, or  4.96 per cent at NSE.

Meanwhile, in another report released earlier in the day, Moody’s said that Reliance Industries’ announcement of sale of a 20 per cent stake in its oil to chemicals (O2C) business to Saudi Arabian Oil Company (Aramco) will reduce the company’s net leverage and is credit positive.

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