BENGALURU: International rating agency S&P Global Ratings lowered the rating on Shriram Transport Finance Company (STFC) to BB from BB+ and revised its and four other NBFCs' outlook to negative.
The rating agency has revised the outlook on Bajaj Finance (BFL), Manappuram Finance, Muthoot Finance and Power Finance Corpration (PFC) to negative but affirmed their ratings.
"Indian NBFCs face increasing risks from challenging operating conditions stemming from the COVID-19 outbreak," the rating agency said in a note.
The rating agency lowered the ratings on STFC owing to tight funding environment for the company amid challenging operating conditions and weakness in asset quality.
"The used commercial vehicle segment is vulnerable in the current slowdown. The company's borrower profile is less resilient to the lockdown and weak economic activity. Also, collections will be more difficult for the company as it has a high reliance on collecting cash repayments," it said.
The rating agency said the negative outlook on BFL reflects its view that there is a one-in-three chance that it will lower the rating over the next 12 months due to rising economic risks in the country's financial sector.
The negative outlook on Manappuram, Muthoot and PFC reflects the rating agency's view that the companies are not immune to heightened economic risks affecting financial system over the next 12-18 months.