“Rating agency ICRA has effected a multi-notch rating downgrade for IL&FS, which is facing liquidity pressure and overleveraged. Its loans and debentures now carry “BB” (junk or non-investment status) as against the previous rating of "AA+". Also, the commercial paper carries "A4" rating against the previous rating of "A1+",” Business Standard reported.
IL&FS Transportation Networks (ITNL) has slipped 15% to Rs 25.55 on the BSE. On the other hand, IL&FS Engineering and Construction Company (IECCL), too, hit a new low of Rs 15.70, down 6.5%, while IL&FS Investment Managers plunged 12% to Rs 10.13 on the BSE on Monday. In comparison, the S&P BSE Sensex was trading 0.53% lower at 38,167 points in late morning trade.
Thus far in the calendar year 2018, all these three stocks have slipped in the range of 68% to 71% on the BSE. In comparison, the S&P BSE Sensex rallied 11.6% during the same period.
ICRA said the downgrade of ratings takes into account the increase in liquidity pressure at the group level. The company is in the process to raise Rs 80 billion of funds from the promoter group (through a mix of rights issue and long-term line of credit). The timely receipt of the fund is important to improve the group's overall liquidity profile, added report. CLICK HERE TO READ FULL REPORT
Meanwhile, the Reserve Bank of India (RBI) has decided to conduct a special audit of IL&FS after it defaulted on Rs 10 billion worth of inter-corporate deposits raised from Small Industries Development Bank of India (Sidbi). The RBI will likely investigate why the investment company did not inform it beforehand about its financial position, reports suggest.
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