Moody’s takes rating action on three NBFCs

Global rating agency Moody’s on Monday took rating action on three non-banking finance companies including Hero FinCorp, India Infoline Finance and Muthoot Finance amidst concerns about how the national lockdown will impact their credit profiles and asset quality.

Moody’s Investor Service has placed Hero FinCorp’s local and foreign currency Baa3 issuer rating under review for downgrade.

It has also placed India Infoline Finance’s Ba3 Corporate Family Rating (CFR), (P)Ba3 foreign and local currency senior secured MTN program ratings, and Ba3 senior unsecured debt rating under review for downgrade.

It affirmed Muthoot Finance’s Ba2 CFR but changed its outlook changed to negative from stable

"We expect the asset quality of these three companies to deteriorate on the back of rising loan delinquencies and defaults, as some customers and businesses will struggle with payments given declining earnings due to the 21-day nationwide lockdown across India," says Alka Anbarasu, a Moody's Vice President and Senior Credit Officer.

While the three-month moratorium by RBI on loans will help borrowers, Moody’s said the liquidity of the three companies would worsen as loan collections decline. Furthermore, their modest balance sheet liquidity offers limited support if loan collections remain at materially lower levels once the moratorium is lifted.

COMMENT NOW