India Credit Downgrades Abate on Signs Economy Bouncing Back
Day laborers seeking work in Noida, Uttar Pradesh, India, on Monday, Jan. 20, 2020. India’s real estate market illustrates the extent of the economy’s woes. Property developers have gone bust, are mired in billions of dollars of debt and unable to secure funding to complete projects as promised. Photographer: Prashanth Vishwanathan/Bloomberg

India Credit Downgrades Abate on Signs Economy Bouncing Back

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The pace of credit-rating cuts for Indian companies has slowed to the lowest since before the pandemic amid signs the local economy is coming out of its worst-ever contraction.

There have been about three downgrades for every upgrade of rupee debt since Oct. 1, the lowest since the last three months of 2019, according to data from India’s four biggest rating firms compiled by Bloomberg. That compares with a ratio of more than four to one in favor of cuts for the previous quarter, and a record 11 to one in the April-to-June period.

India Credit Downgrades Abate on Signs Economy Bouncing Back

Economic data suggests that Asia’s third-biggest economy is recovering, albeit unevenly, after it shrank a record 24% in the three months to June 30. A slower pace of downgrades may open the door to funding for weaker borrowers in India.

That’s as a record 1.38 trillion rupees ($19 billion) of bond obligations from issuers rated AA and below mature in 2021, according to data compiled by Bloomberg.

India’s gross domestic product contracted by 7.5% in the July-September period, compared with a forecast of an 8.2% drop in a Bloomberg survey of economists. Last month, the country unveiled measures totaling $6.6 billion to boost faltering consumer demand and investments, adding to the unprecedented $277 billion stimulus announced in May to cushion the economy from the impact of the coronavirus.

©2020 Bloomberg L.P.

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