Credit rating agency Crisil has revised its rating outlook on the long-term debt instruments, fixed deposit programme and long term bank facilities of PNB Housing Finance Ltd to ‘negative’ from ‘stable’ while reaffirming the ratings at ‘AA+/FAAA’.

The agency, in a statement, said the revision in outlook reflects the increase in leverage and moderation in capital adequacy ratios and increased vulnerability of asset quality in the developer loan portfolio.

While the outlook on total bank loan facilities aggregating ₹4,000 crore; two tranches of lower Tier II Bonds (aggregating ₹400 crore and ₹500 crore each); and Non-Convertible Debentures (aggregating ₹5,700 Crore) has been revised from ‘stable’ to ‘negative’, the rating on this debt has been reaffirmed at ‘AA’.

Similarly, the outlook on Fixed Deposit Programme (aggregating ₹18,500 crore) has been revised from ‘stable’ to ‘negative’ even as the rating on this debt has been reaffirmed at ‘AAA’.

Crisil said the rating on the commercial paper programme aggregating ₹26,000 crore has been reaffirmed at ‘A1+’.

The agency expects that PNB Housing will continue to grow backed by its resource raising ability and maintain an adequate liquidity profile.

“The rating may be downgraded, in case of a delay in the equity raising plans or lower quantum of the same which in Crisil's view may continue to lead to elevated gearing metrics and/or increase in risks/stress in the company's wholesale portfolio, leading to stress on capitalisation and earnings profile and/or lack of reduction in the wholesale book composition.

“Conversely, the outlook may be revised to ‘stable’ in case of sustained improvement in the capitalisation metrics and continued strong asset quality performance while maintaining the same in the wholesale portfolio,” it added.

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