Crisil has downgraded its rating on long-term debt instruments, bank facilities and fixed deposit programme of PNB Housing Finance Ltd worth Rs 4,000 crore to AA/FAA plus from AA plus/FAAA.
It has also revised the outlook on long-term ratings to stable from negative. The rating on the commercial paper issue and short-term non-convertible debentures have been reaffirmed at A1 plus.
Consequent to redemption, Crisil has also withdrawn its rating on non-convertible debentures of Rs 155 crore in line with its withdrawal policy. The agency received independent confirmation that these instruments are fully redeemed.
Earlier in July 2019, Crisil had revised the rating outlook to negative due to concerns over leverage metrics, moderation in capital adequacy ratios and increased vulnerability of asset quality in the wholesale loan portfolio.
"The current downgrade in long-term rating is driven by lower than expected equity raise which will result in the correction in gearing metrics being lower than earlier envisaged," said Crisil.
"The rating action also factors in weakening of asset quality metrics due to slippages from some large developer accounts in the wholesale loan portfolio," it added.
However, Crisil also noted that PNB Housing's fundraising ability has remained intact over the last six to nine months and it is continuing to maintain high on-balance liquidity.
Further, Crisil noted that the management now intends to recalibrate their growth strategy keeping in mind the capital availability and also increase the share of retail book due to challenges in the wholesale book.
This will ensure that post equity raise, the leverage metrics and capital adequacy levels remain under control. Consequently, the outlook has been revised to stable.
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