Amid the coronavirus outbreak, rating agency ICRA is revising its rating method, since it sees some sectors falling into the "high-risk category" after the nationwide lockdown ends.
"In the current COVID-19 induced crisis scenario, ICRA is undertaking a review of its portfolio of ratings by following an approach that involves risk assessment both at the sector level as well as the entity level," ICRA said in a statement.
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ICRA added that it will have a different approach to review ratings of companies that rely on loans from banks and financial institutions, and those that also raise money through debt market instruments.
ICRA made not of the three-month moratorium on term loans granted by the Reserve Bank of India (RBI).
The rating agency assigned risk levels to industries:
- High risk (aviation, gems & jewellery, tourism & hotels, microfinance institutions, etc)
- Medium risk (automobile OEMS and auto-ancillaries, construction, consumer durables, power etc)
- low risk (agri-products, education, FMCG, telecom, etc)
The company added that it has also categorised entities according to risk - most vulnerable, moderately vulnerable and relatively less vulnerable.
ICRA also said it will redraw some projections, with the assumption that normal business conditions will not resume soon.
"Subsequent to our FY2020 ratings action, the current COVID-19 pandemic triggered crisis has led to a widespread deterioration in the credit quality of India Inc. The credit challenges are overwhelming and would impact the credit profiles of a large number of entities across sectors in an unprecedented manner," said Jitin Makkar, head of credit policy at ICRA.