Credit rating agency India Ratings and Research has downgraded PNB Housing Finance Ltd’s (PNBHFL) non-convertible debentures (NCDs) from “AAA” to “AA+”.

This comes following a change in the approach for ratings. Now, the credit assessment is based on the credit profile of PNBHFL, as against the previous approach that factored in the credit strength of the sponsor, Punjab National Bank.

PNB owns 32.8 per cent stake in housing finance companies (HFCs).

Ind-Ra has resolved the Rating-on-Watch Negative (RWN) status for HFCs due to the outcome of the stake sale and clarity regarding the new shareholders and its philosophy is limited at this stage.

PNBHFL is among the top-five HFCs in India in terms of assets under management (AUM), with about a six per cent market share of housing loans, and has a diversified funding profile with second largest outstanding deposits within HFCs.

PNBHFL provides housing loans to individuals, which formed 58 per cent of the total loans in H1FY19. Loans against property to individuals, and wholesale loans such as high ticket construction finance to builders, commercial term loans and lease rental discounting together formed the balance.

Its loan products are mainly towards the medium-to-large ticket loans in metro and Tier-I cities (total 57 cities and towns across India), where competitive intensity in the mortgage space is on the higher side.