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Rating agency ICRA has downgraded the ratings of instruments of Edelweiss Finance & Investments and Edelweiss Housing Finance, and said the outlook remains negative for both.
“ICRA has taken a consolidated view of the Edelweiss Group, given the close linkages between the group entities, common promoters and senior management team, shared brand name, and strong financial and operational synergies,” it said in a statement, adding that the rating downgrade takes into account the increased stress in the wholesale portfolio, leading to a deterioration in the asset quality, and the consequent impact on financial performance.
In the case of Edelweiss Finance & Investments, ICRA has downgraded instruments worth ₹2,735 crore.
For Edelweiss Housing Finance, it has downgraded long-term ratings for instruments amounting to ₹6,760 crore.
“The ratings continue to factor in the group’s demonstrated track record and established position in the financial services industry as well as its diversified business profile,” it said, adding that these positives are partially offset by the credit and concentration risks in the group’s wholesale lending segments and the risks associated with the distressed assets business, given the focus on large-ticket exposures.
It further noted that retail lending has seen an increase in non-performing assets in the past few quarters as the seasoning of the book increases. The group is actively pursuing various alternatives for resolving potential stress and managing the portfolio, ICRA added.
Separately, CARE Ratings re-affirmed its rating at AA- for Edelweiss Financial Services' NCDs and A1+ for commercial papers. even as it revised the outlook from stable to negative. " While the company has been raising incremental funds from banks by way of bank lines, securitization and few retail NCDs in the interest range of 10-11 per cent, the yields in the secondary market continue to remain relatively higher than the retail NCD’s," it said "Therefore, continuous mobilisation of resources for EFSL group and maintaining liquidity during this current operating environment remains a key rating monitorable," CARE said.
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