Credit rating agencies in focus; CARE Ratings surges 19%, ICRA 10%

Shares of credit rating agencies were in focus with all three listed companies – CARE Ratings, Crisil and Icra rallying up to 19 per cent on the BSE on Tuesday on the back of heavy volumes. The S&P BSE Sensex was down 0.42 per cent at 41,384 points.

CARE Ratings zoomed 19 per cent to Rs 648 in the intra-day trade. The trading volumes on the counter jumped multiple-fold with a combined 2.4 million equity shares, representing 8 per cent of total equity of the company, changed hands on the NSE and BSE so far. On an average, sub 50,000 shares are being traded daily on the counter, the exchange data shows.

Shares of Icra soared 10 per cent to Rs 3,227 an was trading close to its 52-week high of Rs 3,350 touched on January 30, 2019.

Crisil surged 6 per cent to Rs 1,922 on the BSE. It hit an all-time high of Rs 2,070 on December 23, after acquisition of Greenwich Associates. Greenwich is a leading provider of proprietary benchmarking data, analytics and qualitative, actionable insights that helps financial services firms’ worldwide measure and improve business performance.

Most of the credit rating agencies had reported de-growth in their operational revenue during the first half of financial year 2019-20 (FY20). The de-growth in operating revenue mainly reflects the subdued demand for funding from the industrial sector and the continued risk aversion to fund non-banking housing finance companies (NBFCs)/housing finance companies (HFCs).

However, revenue from structured finance ratings has shown a good traction as the NBFCs/HFCs opted for securitisation/direct assignment of their loan pools as they continued to face lower investor appetite for on balance-sheet funding.

The various measures announced by the government to arrest the slowdown in the economy, festive season and expectation of pick up in the consumer demand especially rural demand post-harvest could bode well for the Indian economy during the second half of the fiscal year 2019-20, according to management of CARE Ratings.

Meanwhile, the Reserve Bank of India’s (RBI’s) Financial Stability Report (FSR) has raised concerns about rating shopping among companies.

This comes against the backdrop of instances of indicative ratings given by agencies, for which there are no written agreements. The indicative ratings are also not disclosed on the company websites, Business Standard reported.