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Our Bureau

Mumbai, Dec. 31 Rating agency Crisil has downgraded the long-term ratings of eight Indian affiliates of global financial companies.

Crisil has downgraded the long-term debt rating of Barclays Investment and Loans (India) Ltd, Citibank, Citicorp Capital, Citicorp Finance (India) Ltd, Citicorp Maruti Finance Ltd, Citifinancial Consumer Finance India Ltd, Deutsche Investments India Pvt Ltd and J.P. Morgan Securities (India) Pvt Ltd from AAA to AA+.

However, Crisil has reaffirmed the long term rating of HSBC at AAA.

The downgrades have been on account of the current weak global operating environment and its impact on the business and credit profiles of the global financial institutions, a downgrade in the ratings of the parent companies and based on the standalone credit quality of the Indian operations, a release from the rating agency said.

Crisil has, however, reaffirmed the short term ratings of these companies at P1+.

The importance of many of the Indian subsidiaries could reduce for their parents over the medium term as they might not be able to meet the increased expectations of return of their parents, said Crisil in the release.

The sluggish business environment, lack of flexibility to raise resources because of the weakened business profiles and the dependence on wholesale funding would result in lower business volumes and increased borrowing costs for the Indian affiliates.

This would reduce Indian subsidiaries’ ability to make profits for its parent companies.

In case of a difficult operating environment, the cost of supporting Indian operations may become too high for some parent institutions to justify continued support.

However, in case the parents decided to exit, Crisil believes it would happen in an orderly manner.

More Stories on : Credit Rating | Investment Banking

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