India Inc’s investment rating at record high in 2015-16

India Inc put up its best performance in terms of credit rating with 89 per cent of its debt securities being rated as safe for investment - a record high for such issues – during the last financial year.

Data compiled by market regulator Securities and Exchange Board of India (Sebi) show that of the 952 long-term corporate debt securities worth Rs12,80,000 crore rated by credit rating agencies (CRAs) in 2015-16, as many as 852 issues (89.5 per cent) worth Rs12,70,000 crore were rated "investment grade".

This is the best-ever performance in terms of assigning 'investment grade' rating for corporate debt securities so far in India.

Earlier, in 2008-09, nearly 79 per cent corporate debt issues had secured investment rating. However, since then the credit profile of companies for such issues has seen a continuous erosion.

During financial years 2011-12 and 2012-13, credit rating agencies had found 36.6 per cent and 38.68 per cent of such issues as safe for investments while in 2013-14, as much as 44.4 per cent debt securities had received investment grade ratings.

Credit rating of companies had since improved with investment grade rating in 2014-15 rising to about 61 per cent of the debt issues.

CRAs assign a 'non-investment grade' to low-quality bonds that face the highest risk of default. Good quality bonds can be categorised under Highest Safety (AAA), High Safety (AA), Adequate Safety (A) or Moderate Safety (BBB).

During 2015-16, 852 debt issues had investment-grade ratings with highest-to-moderate safety profiles.

These included 309 debt issues worth Rs1,93,000 crore with 'high safety' (AA) and 178 issues (Rs10,30,000 crore) with 'highest safety' (AAA).

While 214 issues (Rs40,889 crore) were assigned the 'adequately safety' (A) rating, 151 issues (Rs6,180 crore) were classified under the 'moderate safety (BBB)' category last fiscal year.

The remaining 100 issues in 2015-16 were found to be of 'non-investment grade'.

Credit rating agencies communicate the assigned rating to the issuer for acceptance as per the practice. The issuer can appeal for a review if the company does not find the rating acceptable.

The rating agencies registered in the country include Crisil, India Ratings and Research (formerly Fitch Ratings India), Icra, Credit Analysis & Research (CARE), Brickwork Ratings India and SMERA Ratings.