Economic slowdown may adversely impact truck operators revenue
PTI Photo (PTI10_1_2015_000223B)

Mumbai: The ongoing economic growth slowdown will have an adverse impact on trucking fleet operators' revenues and ability to repay loans, global ratings agency Moody's Investors Service warned on Thursday. The losses to asset-backed securities (ABS) will also rise as the economy slows, it said.

GDP growth slipped to a six-year low of 5 per cent for the June quarter, leading many to worry about what will be sectoral impact of such a development. "Soft consumption and weak services activity in India will constrain demand for freight transport by commercial vehicle operators, in turn, reducing operators' revenue and weakening their ability to repay loans," its analyst Dipanshu Rustagi said.

The agency said that most Indian auto ABS are backed by commercial vehicle loans, and past episodes of slowing economic growth such as during the 2012-14 financial years have witnessed an increase in auto ABS loss rates. It made it clear that ABS delinquencies have not "increased significantly" in the present slowdown. However, slowdown, the performance of commercial vehicle loans backing ABS deals could deteriorate significantly if "economic conditions remain subdued for a prolonged period", Rastogi said.

(For all the latest News, Mumbai, Entertainment, Cricket, Business and Featured News updates, visit Free Press Journal. Also, follow us on Twitter and Instagram and do like our Facebook page for continuous updates on the go)

Free Press Journal

www.freepressjournal.in