Rs 2.4 trillion debt has been downgraded in first half of this fiscal; 90% of it is from investment-linked or commodity sectors

Mumbai : Domestic ratings agency Crisil Ratings said the fall in commodity prices and a lack of pick-up in investments has resulted in debt of over Rs 2.4 trillion getting downgraded in the first half of the fiscal, and guided towards difficult times ahead for such leveraged companies.

Ninety per cent of Rs 2.4 trillion of the debt is from “investment-linked” or “commodity” sectors, its chief analytical officer Pawan Agrawal said, adding that currency devaluation by China has also hurt companies. The rating agency came out with its half-yearly report on credit quality, which pointed out to debt-weighted credit ratio which is total debt on the balance sheets of firms upgraded versus downgraded, declining to a three-year-low of 0.27 per cent for April-September.

The debt-weighted credit ratio had stood at 0.62 per cent for the entire fiscal 2014-15. The report, however, said it is a better picture if one goes by the number of firms upgraded and downgraded.

In H1, it saw 981 upgrades as compared to 460 downgrades.

He said companies from the infrastructure, commodity and related sectors will continue to be under pressure in the future as well, and those in the consumption and export-linked sectors will see an upping in the credit quality.

Agrawal said investments are getting delayed as there is no deleveraging by non-core asset sales. He acknowledged that fresh investment decisions are taking longer and revival in it depends on reforms and clarity on domestic demand. Steps taken to remove obstacles stalling projects in the power and road sectors will take a few months to show results on the ground, he added.

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