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Debt Quality Index declines again in February, says CARE Ratings

However, there was a marginal improvement seen in January this year on account of enhancements in higher rated debt papers

Abhijit Lele  |  Mumbai 

debt, dues, loan
Representative Image | As it is contemporary with minimum time lags, the health of the debt and credit markets is encapsulated on a near-real-time basis

The quality of of in India declined again in February amid the volatile market and economic slowdown.

Quality Index (CDQI) denotes whether the quality of is improving or declining on a scale of 100 with the base year of 2012. It declined marginally by 0.13 points in February to 87.89. Intuitively, an upward movement indicates improvement in quality of debt benchmarked against the base year.

After a small improvement of four basis points to 88.04 in January, CDQI again declined marginally by 0.13 points in February to 87.89, said in a statement.

The dataset comprises 1,608 from CARE’s portfolio of 2,980 as of March 2012. Currently, the volume of debt of the sample companies stands at Rs 39.62 trillion in February 2020.

As it is contemporary with minimum time lags, the health of the debt and credit markets is encapsulated on a near-real-time basis.

After small rise in April 2019, the Debt Quality Index has been declining for eight consecutive months indicating a moderation in the credit quality of rated entities. It fell sharply (212 basis points) in June 2019 mainly due to moderation in the liquidity scenario for NBFCs and HFCs resulting in sharp rating migration.

Thereafter, it declined by 0.54 points in September 2019 triggered by further downgrades in the NBFC and HFC segment due to the continuing liquidity stress in the segments. It made difficult for entities to raise finance in a timely manner as also delaying monetisation plans.

However, there was a marginal improvement seen in January this year on account of enhancements in higher rated debt papers.

First Published: Wed, March 11 2020. 15:46 IST
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