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India Ratings to launch new products in structured fin, infra

Last Updated: Sunday, December 2, 2012 - 13:43

Mumbai: India Ratings, the wholly-owned subsidiary of Fitch Ratings, is planning to come up with new products in the structured finance and infrastructure space going ahead, a top company official said.

"We believe that within structured finance space, there are a lot of instruments, which should emerge with the development of market...As there is a need for both issuers and investors for certain type of risks, these products should emerge," India Ratings Managing Director and Chief Executive Atul Joshi said.

In the infrastructure space, the rating agency said it will come up with new products that are available in the overseas markets but not here as yet.

"In terms of infrastructure, we are basically seeing securitisation emerging only from toll road projects... A host of other products available in the offshore markets that can be brought to this market like airport or port receivables or it could be trade receivables. So, those are things that will keep developing from our rating basket," he said.

The rating agency, which has five product groups, namely corporate, banks and FIs, public finance, infrastructure and structured finance, also witnessed an increase in demand from corporates in the recent past.

"As far as bonds and capital market instruments are concerned, we have seen more pick-up in the past few months. Also, we have witnessed more rating enquiries from corporates and public sector units, which are planning to enter the capital markets," Joshi said.

He, however, added there is a drop in the rating enquiries by SMEs in the recent past.

When asked about the impact of the slowdown on their previous ratings, senior director for financial institutions Ananda Bhoumik said there has been little impact on the ratings as the company does not believe in frequent fluctuations in the rating process.

"As many as 85 percent of our ratings portfolio remains stable despite the slowdown. And this is the result of strategic thinking at our parent," Bhoumik said.

On the company's the revenue front, he said banking and corporates ratings constitute bulk of the revenue.

Fitch entered the country over a decade ago and has been profitable since the first year, Joshi said, while refusing to share the numbers.

On growth, he said the company is likely to see a 15 percent growth in revenue going ahead.

In terms of market share, the company claims around 60 percent in banking space, 40 percent in structured finance, especially asset-backed securities (ABS) and mortgaged-back securities (MBS), and only around 10 percent in the SME sector, while it is not present in the MFI space.

India Ratings currently rates around 800 small units now, Bhoumik added.

Talking about the future trend, Joshi said uptick in rating activity would continue in the near term.

"I do expect these activity will continue. As there is an expectation in the air that the Reserve Bank will reduce rates in a few months, it is building up interest among investors. Also, corporates are interested in taking the advantage of arbitrage that lies between bond interest rates and loan interest rates as bonds are cheaper than loans," he said.


First Published: Sunday, December 2, 2012 - 13:14
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