Non-investment grade ratings hit record high level

Credit rating agencies in August rated a total of 254 long-term corporate debt securities worth Rs 67,500 crore

Indicating companies' deteriorating credit profile, nearly 70% of their debt securities were assigned 'non-investment grade' ratings in August this year -- the highest monthly figure for such issues in 2013.

Credit rating agencies (CRAs) in August rated a total of 254 long-term corporate debt securities worth Rs 67,500 crore, latest data compiled by market regulator Sebi shows.

Out of this, as many as 177 ratings were categorised as 'non- investment grade', while 77 issues were given ratings of 'investment grade' with highest-to-moderate safety profiles.

A 'non-investment grade' applies to low-quality bonds that face the highest risk of default. Debt securities are issued by companies to raise funds for a variety of purposes such as business expansion.

These 177 'non-investment grade' securities were together worth Rs 3,351 crore -- the second  highest value for this category in this year.

The 77 issues that fell under the 'investment grade' category cumulatively amounted to Rs 64,148 crore.

Individually, 9 issues were assigned the top investment grade 'Highest Safety (AAA)' which were worth Rs 23,536 crore, while 22 securities valued at Rs 24,256 crore fell under high-safety (AA) rating.

Besides, CRAs gave eight issues an 'adequate safety (A)' grade and 38 were assigned the 'moderate safety (BBB)'ratings.

During April-August period of the current fiscal, a total of 974 issues worth about Rs 6.46 lakh crore were graded, of which 554 issues valuing Rs 9,435 crore have been categorised under the 'non-investment grade'.

Meanwhile, only 17 rating downgrades worth Rs 10,145 crore were accepted by the respective companies, as against 22 upgrades amounting to Rs 648 crore, during August.

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 with market regulator Sebi are -- CRISIL, India Ratings and Research (formerly Fitch Ratings India), ICRA, Credit Analysis & Research (CARE), Brickwork Ratings India and SME Rating Agency of India.