CRISIL changes rating outlook of Indiabulls cos to 'Negative'

MUMBAI: CRISIL, the local arm of S&P Global, changed ratings outlook of Indiabulls Housing Finance (IBHF) and its wholly owned subsidiary - Indiabulls Commercial Credit (ICCL) to "Negative" from "Watch Developing" citing fund raising challenges.

The rating company marked such negative outlook for long term ratings and various debt securities worth Rs 27,049.98 crore for two companies collectively.

“The long-term ratings have been assigned 'Negative' outlook on account of possibilities of funding access challenges continuing due to the non-fructification of the proposed merger with LVB,” CRISIL said in a late evening release Tuesday.

It also raised concern over the public interest litigation, recently filed against the company (IBHF) that can dent investor confidence.

“The outlook also reflects the potential impact on the financial flexibility of the company due to the recent sharp fall in its equity price,” the rating company said.

A few days ago, Moody's Investors Service downgraded IBHF’s foreign-currency rating to B2 from Ba2.

Earlier this year on September 10, CRISIL had revised its rating on the long-term debt instruments of IBHFL to 'AA+' from 'CRISIL AAA'.

The ratings continued on watch given the proposed merger of IBHFL along with ICCL into and with the Lakshmi Vilas Bank (LVB), Crisil said. The transaction was awaiting regulatory approvals.

The watch resolution followed the announcement by IBHFL on October 09, 2019 that the Reserve Bank of India (RBI) has not approved the voluntary amalgamation of IBHFL and ICCL with LVB.

With the proposed merger no longer on the cards, the company has started tapping the banking channels once again and plans to increase the quantum of fund raising significantly going forward.

CRISIL will continue to monitor the fund raising by IBHFL, in terms of the quantum, the cost, as well as the diversity of sources, it said.

At the same time, CRISIL will also closely monitor the progress on proceedings pertaining to the public interest litigation (PIL) recently filed against the company. The company, on its part, has refuted the allegations against it in the PIL.

But, the company seems to show signs of improvement in first fortnight of October with IBHFL having received credit sanctions to raise Rs 5,200.