SKS shares surge 13% on getting 'A' rating for bank facilities
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SKS shares surge 13% on getting 'A' rating for bank facilities

Last Updated: Wednesday, September 18, 2013, 13:46
 
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SKS shares surge 13% on getting 'A' rating for bank facilities
Mumbai: Shares of SKS Microfinance on Wednesday surged nearly 13 percent after the company said it has received 'A' ratings for bank facilities of about Rs 2,000 crore from a leading rating agency, which could help it enhance credit availability and reduce cost of borrowings.

The announcement was made after market hours yesterday.

SKS Microfinance scrip zoomed 12.6 percent to Rs 139.35 on the BSE.

At the NSE, the stock shot-up by 12.86 percent to Rs 139.45.

SKS Microfinance had yesterday said that a leading rating agency has assigned 'A' for its long-term and 'A1' for its short-term bank facilities for Rs 2,000 crore.

"The ratings would help to reduce the risk weights assigned to banks' exposure on SKS Microfinance from the present 100 percent to 50 percent in the case of long-term facilities and 30 percent for short-term facilities," S Dilli Raj, Chief Financial Officer, SKS Microfinance had said.

"The ratings are likely to enhance credit availability and reduce the cost of borrowing as they will free up capital allocation for banks in the case of SKS Microfinance's borrowings. We are unable to quantify the gains at this juncture, but expect the impact will be positive," he added.

According to the rating agency, instruments with 'A' rating are considered to have adequate degree of safety regarding timely servicing of financial obligations and carry low credit risk. Instruments with 'A1' rating are considered to have very strong degree of safety regarding timely payment of financial obligations and carry lowest credit risk, SKS had said in a filing with BSE yesterday.

SKS Microfinance Limited's borrowings as of August 31, 2013 stood at Rs 1,675 crore.

PTI



First Published: Wednesday, September 18, 2013, 13:46


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