Indian NBFCs need to repay about Rs 1.2 lakh crore of commercial paper debt in O…

Indian NBFCs need to repay about Rs 1.2 lakh crore of commercial paper debt in October-December The timing isnt ideal. Indian money-market funds popular over lower-yielding savings accounts suffered the worst withdrawals since at least April 2007 last month after the IL&FS defaults spooked the market. Indias non-bank financial companies have had a tough few months amid the fallout from defaults by one of their own conglomerate IL&FS group. The next few months also present a challenge to the NBFCs which rely heavily on debt issued to the nations money market funds for short-term financing. The financiers must repay about 1.2 trillion rupees ($16.3 billion) of commercial paper in October-December near a record 1.46 trillion rupees in August-October according to data from Securities and Exchange Board of India. The timing isnt ideal. Indian money-market funds popular over lower-yielding savings accounts suffered the worst withdrawals since at least April 2007 last month after the IL&FS defaults spooked the market. And generally financing costs throughout Indias credit markets have ticked higher meaning that rolling over all this debt will cost more. Read a QuickTake about IL&FS The non-bank financial companies may be forced to turn to un-utilized bank facilities to pay down some of the maturing CP debt according to A.M. Karthik sector head financial sector ratings at ICRA. A crucial thing to watch is whether banks will allow the NBFCs to make timely draw downs on these facilities as the mutual funds are facing pressure he said. There have at least been some encouraging signs of support from policy makers. Indias central bank eased rules last week to help the nations non-bank lenders access loans more easily. The support came after Moodys Investors Service flagged risks to credit profiles of non-banking financial institutions due to prolonged liquidity distress triggered by defaults at IL&FS Group. ift.tt/2ScxivZ

Source by ecgnews