India Inc's credit profile at its best last financial year: Sebi

An analysis of the Sebi data showed that this is the best performance for a year in terms of assigning 'investment grade' rating for corporate debt securities so far in India

India Inc's credit profile was at its best last financial year with over 89% of its debt securities being rated as safe for investment. Photo: Collin Furtado

India Inc's credit profile was at its best last financial year with over 89% of its debt securities being rated as safe for investment -- a record high for such issues.

Credit rating agencies (CRAs) in 2015-16 rated a total of 952 long-term corporate debt securities worth Rs 12.8 lakh crore, as per the data compiled by Securities and Exchange Board of India (Sebi).

Of these, as many as 852 issues (89.5%) worth Rs 12.7 lakh crore were rated to be of "investment grade".

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An analysis of the Sebi data showed that this is the best performance for a year in terms of assigning 'investment grade' rating for corporate debt securities so far in India.

Earlier in 2008-09, nearly 79 % corporate debt issues were rated to be of investment quality. Following this the credit profile of companies for such issues was seeing continuous deterioration.

During financial years 2011-12 and 2012-13, CRAs had rated 36.6% and 38.68% issues as safe for investments. As much as 44.4 % debt securities had received investment grade ratings in 2013-14.

In 2014-15, the investment grade ratings took an upturn when about 61 % of the debt issues were assigned investment grade.

CRAs assign a 'non-investment grade' to low-quality bonds that face the highest risk of default. Good quality bonds can be categorised under Highest Safety (AAA), High Safety (AA), Adequate Safety (A) or Moderate Safety (BBB).

During 2015-16, 852 debt issues had investment grade ratings with highest-to-moderate safety profile.

These included, 309 debt issues worth Rs 1.93 lakh crore with 'high safety (AA)'. Besides, 178 issues (Rs 10.3 lakh crore) as 'highest safety (AAA)'.

While 214 issues (Rs 40,889 crore) were assigned as adequately safety (A), 151 issues (Rs 6,180 crore) were classified under 'moderate safety (BBB)' category, during the last fiscal year.

The remaining 100 issues in 2015-16 were found to be of 'non-investment grade'.

As per the process followed by credit rating agencies, the assigned rating is communicated to the issuer for acceptance. In the case where the issuer does not find the rating acceptable, it can appeal for a review.

The rating agencies registered in the country include Crisil, India Ratings and Research (formerly Fitch Ratings India), Icra, Credit Analysis & Research (CARE), Brickwork Ratings India and SMERA Ratings.

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