Unprecedented stimulus spending is leading to some early signs of recovery in the financial health of Indian companies after a tragic second wave of Covid-19.
The ratio of upgrades to downgrades in ratings and credit outlooks by the local units of S&P Global Ratings, Moody’s Investors Service and Fitch Group has improved to 1.2 this quarter, set for the highest level in nearly three years, data compiled by Bloomberg show.
“Local companies are facing fewer downgrades during the second wave of the pandemic than during the first wave as most of them have bolstered their liquidity in the past couple of quarters, thanks to all the pandemic support announced by policymakers, ” said K. Ravichandran, a deputy chief rating officer at ICRA Ltd, a local unit of Moody’s.
The nascent recovery in Indian firms’ credit quality adds to signs that the pandemic-hit economy may be turning a corner. Still, many investors remain cautious and are piling into bonds that compensate them with higher coupons each time the notes suffer a rating downgrade.
Companies had sold 94.2 billion rupees (US$1.3bil or RM5.37bil) of local-currency notes as of Wednesday and plan to sell as much as 56.1 billion rupees in the remainder of the week. Issuance totalled 13 billion rupees last week.