Subodh Rai, senior director, Crisil Ratings, said: “Three out of four investment-grade companies (rated Crisil BBB- or higher) and one out of two in the BB rating category qualify for restructuring of bank loans.”Nearly two-thirds of the companies rated by Crisil would be eligible for one-time debt restructuring, the rating agency said on Thursday. The rating firm has studied its rated portfolio of more than 8,500 companies after sorting them by rating, sector and moratorium. The assessment by Crisil excludes small and medium enterprises and financial sector companies.
The study was conducted after the central bank specified five key ratios across 26 sectors for lenders to follow while restructuring of corporate accounts impacted by Covid-19. The agency also specified that a final picture on how many companies have qualified for restructuring will only emerge over the next three-four months.
Subodh Rai, senior director, Crisil Ratings, said: “Three out of four investment-grade companies (rated Crisil BBB- or higher) and one out of two in the BB rating category qualify for restructuring of bank loans.” However, in the Crisil B category, only one in three qualify because companies here tend to have relatively weak debt protection metrics, he added.
While the parameters support debt restructuring across rating categories, the study indicated that companies in the resilient sectors stand to benefit more. Three out of four rated ones in the resilient sectors such as construction, chemicals, pharmaceuticals, iron and steel manufacturing, corporate retail and consumer durables/FMCG will qualify for restructuring.
The agency said in the less-resilient sectors such as auto dealerships, gems and jewellery, hotels, restaurants and tourism, power generation and real estate, opportunities for debt restructuring could be a little lower. Crisil said these sectors can take longer to recover to pre-pandemic business levels. Here, only one in three companies could be eligible for restructuring, rating firm said.
Crisil also said restructuring will also be available to a large number of companies that opted for the moratorium.
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