Downgrades Down In First Half Of 2003

Rating agency Icra says this indicates continuation of recovery

Rating agency Icra has said downgrades have come down during the first half of 2003 compared with the first half of 2002.

The number of upgrades in the first half of this year has also been higher than that of the previous year.

According to Icra, the performance in the first half of 2003 marks a continuation of the trend seen in 2002, when the improvement in business environment was reflected in a decline in the number of ratings (in the long- and medium-term categories) downgraded, and an increase in the number of upgrades.

 

The continuity in rating performance indicates the impact of a recovery phase and the consequent improvement in corporate performance across various industries, the agency added.

Compared with 20 rating downgrades by the agency in the first half of 2001 and 16 in the first half of 2002, there were 10 rating downgrades in the half-year ended June 2003.

There was also an increase in the number of rating upgrades to five during the first half of 2003 against three in the first half of 2002 and only one in the first half of 2001.

Of the five entities upgraded in the first half of 2003, four belong to the auto/auto-ancillary sectors.

Of the 10 entities whose long-/medium-term debt ratings were downgraded, three are from the non-banking finance companies and financing institution sectors, and two from the tractor industry.

The rest belong to other diverse industries, including, hotels, electronics, and glass.

During the first half of 2003, only one Icra long-/medium-term rating moved from the investment category into the non-investment (NI) category. There were seven such rating movements during the first half of 2002.

The percentage of Icra