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Crisil, CARE reaffirm ratings for LIC Housing
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Rating agency CARE has reaffirmed its ‘AAA' rating of LIC Housing Finance's debt instruments.
CARE has reaffirmed the AAA rating of LIC Housing Finance's non-convertible debentures aggregating to Rs 18,322 crore.
CARE has also reaffirmed the ‘AAA' rating for tier-II bonds of Rs 750 crore and upper Tier-II bonds of Rs 1,600 crore of LIC HF.
Last week, rating agency Crisil had reaffirmed its highest rating on LIC HF's debt instruments, bank loans, commercial papers and fixed deposit programme.
While reaffirming the rating, Crisil said the parent LIC's continued support works in the housing finance company's favour.
LIC Housing's exposure to the real estate developer segment is at a manageable level of around 11 per cent of its total loan book, Crisil said.
The gross non-performing assets (NPAs) in this segment were negligible at 0.08 per cent as on October 31, 2010 (overall gross NPAs stood at 0.74 per cent as on September 30, 2010), the agency said.
LIC Housing's current liquidity is also comfortable, reflected in unencumbered cash and bank balances and investments in liquid mutual funds of around Rs 950 crore as on November 29.
The mismatches in the near-term buckets are adequately covered by unutilised bank lines, the rating agency said
LIC Housing Finance's stock had tanked more than 31 per cent in four trading sessions after its CEO, Mr R.R. Nair, was arrested on November 23 for allegedly receiving bribes, while approving loans to project developers.
The stock had touched a one-month low of Rs 901.50 on November 29 before recovering marginally.
UBS report
According to an UBS report that came out on November 25 immediately after the scam broke out, “We do not expect systemic NPL risk arising out of this issue.
“However, we believe LIC HF franchise will be adversely impacted in the medium term given the management disruption and fresh questions on quality of the loans, momentum lost on growth, focus on internal systems and process.”
The LIC Housing Finance stock ended at Rs 1,005 on the BSE on Tuesday, down 2.22 per cent from the previous close of Rs 1,027.80.
According to Edelweiss, which downgraded the stock to reduce, “We believe the CBI investigation on corporate loan cases of LIC Housing Finance will have negative implications on the company, both from financial as well as sentimental perspective.”
Source :- Business Line |
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