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Truck operators revenue could be hit as economy slows down: Moody's

The losses to asset-backed securities (ABS) will also rise as the economy slows, said Moody's

Press Trust of India  |  Mumbai 

Truckers are neutralising this fall in dispatches through higher loading of agricultural produce, with early harvesting in this rabi season. Agricultural goods are exempt from GST and do not require generation of e-way bills
Representative Image

The ongoing economic growth slowdown may hurt trucking fleet operators' revenues and ability to repay loans, global ratings agency Moody's Investors Service warned on Thursday.

The losses to asset-backed securities (ABS) will also rise as the economy slows, it said.

GDP growth slipped to a six-year low of 5 per cent for the June quarter, leading many to worry about what will be sectoral impact of such a development.

"Soft consumption and weak services activity in India will constrain demand for freight transport by commercial vehicle operators, in turn, reducing operators' revenue and weakening their ability to repay loans," its analyst Dipanshu Rustagi said.

The agency said that most Indian auto ABS are backed by commercial vehicle loans, and past episodes of slowing economic growth such as during the 2012-14 financial years

have witnessed an increase in auto ABS loss rates.

It made it clear that ABS delinquencies have not "increased significantly" in the present slowdown.

However, slowdown, the performance of commercial vehicle loans backing ABS deals could deteriorate significantly if "economic conditions remain subdued for a prolonged period", Rastogi said.

First Published: Thu, September 05 2019. 15:20 IST