Protracted liquidity stress to erode Indian NBFCs' credit profiles: Moody's

Says liquidity tightness might lead to sharply higher financing costs, or even difficulty in rolling over their liabilities

Global credit rating agency Moody’s Investor Service on Monday raised concerns over the current liquidity stress in the market and its likely impact on non-banking financial companies (NBFCs). 

“Indian NBFCs’ credit profiles will erode significantly if the current liquidity stress is protracted,” it said. The companies would face a significant impact of a continued distress in the country's capital markets, as liquidity tightness could lead to sharply higher financing costs, or even difficulty in rolling over their liabilities, according to the credit rating agency.

As for the performance of India’s structured finance sector and asset-backed securities, Moody's, however, said that there would be no major impact on credit quality.