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IFCI’s long-term and short-term ratings have been placed under watch with negative implications by credit rating agency ICRA.
The ‘A’ rating on IFCI’s long-term bank borrowings as well as long-term bonds (including subordinated debt) aggregating Rs 2,416 crore and Rs 6,691 crore, respectively have been placed by ICRA under watch with negative implication.
Further, the ‘A1’ rating on the non-deposit taking non-banking finance company’s commercial paper aggregating Rs 500 crore has been placed by the rating agency under watch with negative implication.
Financial instruments with ‘A’ rating are considered to have adequate degree of safety regarding timely servicing of financial obligations. Short-term instruments with ‘A1’ rating are considered to have very strong degree of safety regarding timely payment of financial obligations.
Asset quality
ICRA reasoned that IFCI has seen a sharp deterioration in its asset quality indicators (net NPA increased from 3.9 per cent as on September 2012 to 10.2 per cent as on March 2013), additionally its high level of restructured/ rescheduled advances and higher vulnerability of its portfolio could put further pressure on its asset quality indicators given the difficult operating environment.
In addition, exit of a large number of senior executives and other related human resources issues further add to the challenges that IFCI faces.
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