After three years, rating upgrades take lead: Crisil

In line with the turnaround in the economic climate, the number of rating upgrades, reflecting improvement in the financial profile of companies, surpassed the downgrades in the October 2009-March 2010 period, according to rating agency Crisil.

In a reversal of a three-year trend, it upgraded 108 companies as against 95 downgrades. The number of defaults, too, declined during the second half of the year to 20, from 29 in the first half, the agency said in a statement today.

The credit cycle seems to have turned after the recent global economic slowdown. These trends were observed on a portfolio of almost 4000 Crisil-rated entities. Of these, 75 per cent are mid-sized entities, each having an annual turnover of less than Rs 500 crore.

Roopa Kudva, Managing Director and CEO, Crisil, said: “We believe the worst is over for the Indian economy and present trends indicate that upgrades will outnumber downgrades in 2010-11. However, the degree to which the credit cycle turns will depend on the sustainability of demand growth and the impact of fresh capital expenditure on players’ balance sheets.”