“Crisil expects corporate India will continue to face credit quality pressure because of high input costs and interest rates, coupled (for exporters) with lower realisation because of rupee appreciation,” the credit rating agency said in a release on Monday.

The modified credit ratio (MCR) by the agency, which stood at 0.97 times for the year ended March 2008, showed that the downgrading done by the agency was far more than the upgrading done by it, it added.
“This is the first time in four years that MCR has remained below one time for an entire financial years. It marks a reversal after four years of steadily improving credit quality for Indian corporates,” Director of Crisil Rating N Muthuraman said.

However, it added, the rating agency did not expect any rise in the number of defaults among rated companies. Meanwhile, rapid growth in the bank loan ratings has pushed up the number of new ratings assigned by Crisil.

Positive move

Crisil said RBI’s new capital adequacy framework — Basel II — has been positive for development of debt markets.

Crisil rated bank facilities of Rs 1.92 lakh crore, which represents more than one-eighth of the Indian banking system’s corporate exposure, the rating agency said. Further, it said most of the newly-assigned long-term BLR were in the category of ‘A’ and ‘BBB’.

“We see this as a landmark for the Indian rating industry ... The rising number of BLRs has now resulted in a fuller distribution... This moves CRISIL’s rating distribution closer to that of overall credit market,” Senior Director of CRISIL Ratings Raman Oberoi said.