Record Stimulus Helps Indian Firms Boost Financial Health

(Bloomberg) -- Unprecedented stimulus spending is leading to some early signs of recovery in the financial health of Indian companies after a tragic second wave of Covid-19.

• The ratio of upgrades to downgrades in ratings and credit outlooks by the local units of S&P Global Ratings, Moody’s Investors Service and Fitch Group has improved to 1.2 this quarter, set for the highest level in nearly three years, data compiled by Bloomberg show

Primary Market -- Busy Week

• Companies had sold 94.2 billion rupees ($1.3 billion) of local-currency notes as of Wednesday and plan to sell as much as 56.1 billion rupees in the remainder of the week. Issuance totaled 13 billion rupees last week
• In the offshore debt market, billionaire Azim Premji’s information technology unit sold its maiden dollar bond this week to tap cheaper overseas borrowing costs for refinancing debt. Wipro IT Services, a unit of Wipro Ltd., priced a $750 million five-year dollar note at +80 basis points

Secondary Market -- Adani Bonds

Credit Rating -- Delhi International Airport

• Moody’s Investors Service last week downgraded Delhi International Airport’s rating to B1 from Ba3, citing the adverse impact of a Covid-induced drop in passenger traffic and airport revenue

• “Some sectors such as aviation and hospitality that have been struggling since the first wave continue to face challenges in the second wave. They may take longer to recover to the pre-pandemic levels of revenue,” said Abhishek Bhattacharya, an analyst at India Ratings

Distressed Debt -- Microfinance Woes

• The amount of Indian microfinance loans in arrears for over 30 days could more than double to 14%-16% of the total in June from 6%-7% in March due to the fallout from the second coronavirus wave, Crisil Ratings wrote in a note

• India’s top court refused to examine a petition that sought directions to federal government for measures to ease financial distress caused by the second wave of Covid-19 infections and local shutdowns
• Reliance Infrastructure, a member of Reliance Group, will subscribe to as much as 595 million shares of Reliance Power and a maximum of 730 million warrants convertible to equity by swapping its outstanding debt including interest of up to 13.25 billion rupees

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