Financial Daily from THE HINDU group of publications
Wednesday, Apr 12, 2006
Financial Daily from THE HINDU group of publications Wednesday, Apr 12, 2006 |
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Credit Rating Corporate - Performance 2005 default-free year for Crisil cos Our Bureau
Default years The majority of the defaults occurred during 1997-1999. This was due to economic recession, and structural and regulatory changes, especially in the financial sector
Mumbai , April 11 For the first time in a decade there has not been a single default among Crisil-rated companies in a calendar year (2005), said the rating company after its annual default study. The study said Crisil had an accuracy ratio of 0.8 (the Gini coefficient) and compares favourably against Standard & Poor's global average of 0.84. Non-banking finance companies, metal, mining and steel, textile and consumer products were the sectors that accounted for about 50 per cent of the defaults on Crisil-rated debt over the past 14 years. Chemicals, construction and construction material, and automotive sectors were also among the sectors where higher default occurred, according to the study. The majority of the defaults occurred during 1997-1999. This was due to economic recession, and structural and regulatory changes, especially in the financial sector, noted Crisil. Although economic cycles will continue, Crisil believes that structural and regulatory changes of this magnitude are unlikely in the future, rendering a repeat of such default rates a remote possibility. Crisil's default rates for the last five years stood at an average of 1.4 per cent as against an average default rate of 2.1 per cent observed over the entire 14-year period of the study.
Related Stories: More Stories on : Credit Rating | Performance | Non-Performing Assets
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