Amid sluggish economic growth and slowing earnings, global rating agency, Moody’s Investors Service in its latest report has said that credit conditions will weaken for most Indian non-financial companies in 2020. Upside factors for Moody’s outlook on India’s non-financial companies include a ramp up of government’s stimulus measures aimed at reviving consumption demand, and better funding and market liquidity conditions whereby domestic demand and consumer funding both get a boost.
As per the report, continued depreciation of the rupee against the US dollar has limited negative credit implications for rated companies, as most have natural hedges in place. Besides, refinancing risk for long-term debt maturities remains manageable for most rated companies, although they are reliant on continued annual rollovers of short-term working-capital financing. It also said that funding conditions also remain tight, slowing demand for consumer goods & leaving banks selective in extending loans to companies.
The rating agency is further expecting stable conditions for the infrastructure sector, on the back of their strong market positions and long-term contracts with availability-linked revenue, where they get paid in full regardless of product demand as long as they can deliver the full contracted service. Moody’s also noted that credit quality of infrastructure issuers will remain stable.