Investment information agency ICRA has cut ratings for Piramal Capital and Housing Finance Ltd's (PCHFL) bonds, term loans and debentures from AA+ to AA on rising challenge to raise money in the risk-averse environment.
These challenges stem from current operating environment and risk-averse sentiment of investors towards non-banks, particularly wholesale-oriented financiers.
"PCHFL has witnessed increase in its cost of borrowings during recent months along with shortening of tenor for its commercial paper borrowings," ICRA said in a statement.
"The resilience of PCHFL's business model to such external shocks will depend on its ability to raise long term funding and infusion of fresh equity."
ICRA said the outlook on long-term rating continues to remain negative due to predominantly wholesale book, with large sized exposures particularly in real estate and infrastructure segment.
However, the Piramal Group has taken several measures to shore up long-term funding for the financial services business having raised long-term funds in excess of Rs 23,700 crore over the past nine months. It has significantly reduced the share of commercial paper in overall borrowings.
The Group continues to explore fresh funding avenues and is in the process of tying up sizeable amount of funds to support liquidity and future growth.
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