InvestorQ : Why has ICRA downgraded DHFL's rating for Rs8,000 Crore Commercial Paper?
shrinidhi Rajan made post

Why has ICRA downgraded DHFL's rating for Rs8,000 Crore Commercial Paper?

Answer
user profile image
Shreya Karn answered.
1 year ago


After being able to get a top-notch rating of A1+ for the last 3 years, ICRA declined DHFL rating to A2+ which is a decline from its previous rating of A1+. Following the downgrade, the stock price of DHFL slipped at the close of trade on Tuesday to Rs 130.60. ICRA is an independent credit rating agency which provides ratings to the financial institution and financial products after analysing them.

ICRA believes that the resources, along with monthly collections which DHFL posses is only good to fulfill the scheduled repayments till March 2019. The concern of ICRA lies that what if the lenders prematurely ask for their loans or if there are higher-than-anticipated premature deposit withdrawals, then the liquidity of the company would be in stress.

The agency said, “The rating revision takes into account the moderation in the company’s financial flexibility owing to challenges faced in raising funds from traditional bank lines and debt market instruments and the consequent impact on the company’s ability to generate fresh business.”