Fitch Places Ifci Under Rating Watch

Fitch Rating India today followed Moody's Investors Service and ICRA and put the preference shares, fixed deposit and short-, medium- and long-term ratings of IFCI on watch with negative implications.

The development comes in the wake of liquidity pressures and cash flow problems being currently encountered by the New Delhi-headquartered financial institution.

Fitch said that IFCI's liquidity position is expected to remain under stress in case of further delay in liquidity and capital support from the government and the reserve Bank of India.

"Capital support from its major shareholders, including Industrial Development Bank of India, has not been forthcoming," it added.

 

"IFCI faces liquidity pressures due to clubbing of its repayments when it exercised a call option on some of its high cost bonds raised earlier for premature repayment," Fitch said in a statement issued today.

This coincided with other scheduled repayments aggregating over Rs 1,100 crore. "IFCI's current liquidity crisis stems from its continued deterioration of its asset quality, weak capitalisation levels, mismatch in its asset-liability maturity profile and shrinkage in its interest margins," the rating agency added.