Finance

ICRA Says The Financial Sector Is Getting More Downgrades Than Upgrades

ICRA Says The Financial Sector Is Getting More Downgrades Than Upgrades
ICRA Says The Financial Sector Is Getting More Downgrades Than Upgrades

Kartik Srinivasan, the financial group head of ICRA on Friday said that the agencies are facing downgrades.

“Instead of upgrades in financial marketing, we are facing downgrades”. These were the words of the group head of the ICRA (Investment Information and Credit Rating Agency). The stress as well as the asset quality is concerned and has peaked. Therefore, the slippages per quarter are less than 4%. However, all these numbers have not come out in Q2. These are the words of Srinivasan in the recent interview.

The numbers can be seen increasing but at the same time, there is so much stress also. There are so many new pockets of stress coming out to us. He said that one of us have to look closely at them. We always maintain the stance at the end of the year, and the NPA number should come down. But the large part is going to depend on how resolutions happen. He added that the resolutions happen on some exciting impaired assets.

ICRA Says The Financial Sector Is Getting More Downgrades Than Upgrades
ICRA Says The Financial Sector Is Getting More Downgrades Than Upgrades

Further, speaking about yields, Lakshmi Iyer (CIO debt of Kotak Mahindra AMC) said that “the G-Sec yields have remained flattened”. Therefore, this flatness in G-Sec is marginally upwards. Hence, the corporate bond is there having largely mirrored than sentiment.

According to the short end of yield, the curve has broadly mimicked the 25 bps rate. Therefore, in this curve, there is a short cut also. The cut is around 15 to 20 bps in a downward reduction. This is especially in the CP borrowing program of most cooperate. This further includes long-term rated AA, AA minus entities.” 

There is high-end inertia also to lend, this is going to help in the capital market segment standpoint. She further added that we have not yet seen any material improvement in the yields. We just can see is the downgrade of the financial sector.

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