Number of ratings dpwmgrades rise: ICRA

There has been a sharp increase in the number of ratings downgrades in the second half (H2) of 2011) according to a study by ratings firm Icra. While rating upgrades as a percentage of fresh issues during the period have declined, it said

Icra notes that following adverse changes in the operating environment, the total number of rating downgrades as a percentage of opening issuers reported a sharp increase from 4.4% in the second half to 5.8% in the first half of 2011, and further to 10.3% in the second half of 2011.

An analysis of the rating actions during the last four halves indicates that the inverse credit ratio- a ratio between downgrades and upgrades which. After having declined from 1.01 in the first half of 2010 to 0.62 in the second half of 2010, it rose to 1.36 in the first half of 2011 and further to 2.34 in the second half of 2011. This was driven primarily by a significant increase in rating downgrades, the report noted.

In terms of sectors, ththse wothj most downgrades in the second half of 2011 included, among others: textiles; metals & mining; real estate & construction; food & food products; and power/power related infrastructure companies. These sectors accounted for about 48% of the downgrades during the period. As for upgrades, the main sectors in which there were upgrades included, among others: real estate & construction; auto ancillaries; textiles; gems & jewellery; and food & food products. These sectors accounted for about 39% of the total upgrades during the period under review.