Rating agencies caught in the crossfire

There are close to 300 triple-A rated companies. Many of them will be downgraded and banks' capital requirements will rise

Many in the top management of India’s rating agencies are spending sleepless nights.

The rules of bank loan ratings with credit enhancement (adding “CE” suffix) have changed, but there is no change for the ratings of other debt instruments. Bank loan ratings have more than 90 per cent share of the rating universe and many entities, which are seeking bank loans, are also raising debt in the form of bonds and non-convertible debentures, etc., from the market. 

Seven credit rating agencies have collectively rated at least 59,000 companies so far. Of these, 920 have active debt issues.

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