Surveillance of IL&FS's debt instruments remains stalled due to the company's continued non-cooperation. This limits clarity on the group's financial position and operating performance for investors, lenders, and other stakeholders.
Highlights
- ICRA retained IL&FS in the issuer non-cooperative category because the company did not provide the information required for rating surveillance.
- Remaining listed in the non-cooperative category makes rating signals more difficult for market participants to interpret and complicates their assessment of the company's risk.
- Disrupted information flow in cases such as IL&FS has increased the need for independent risk assessments by investors and lenders, as well as for greater transparency.
This article was translated from the original. Read the original version by our correspondent here.
Information barrier in rating surveillance
ICRA says Infrastructure Leasing & Financial Services Limited (IL&FS) remains in the issuer non-cooperative category because the agency has been unable to obtain relevant information from the company for rating surveillance. The lack of required documents and operational and financial information prevents the agency from carrying out its assessment in the usual manner.The agency says the rating will remain in the non-cooperative category until the company provides the required documents and engages more closely with ICRA for further assessment. This makes rating signals more difficult for market participants to interpret.
Impact on stakeholders and the market
Such a category generally indicates that information is limited, making independent risk assessment more important for investors, intermediaries, lenders, and other relevant parties. In the case of a name like IL&FS, reduced information flow further increases the need for transparency on financial health and operating performance.ICRA states in its company profile that it rates debt instruments issued by corporate entities, commercial banks, non-banking financial companies, financial institutions, public sector undertakings, and municipal bodies. An issuer remaining in the non-cooperative category therefore underscores the importance of information availability and ongoing surveillance in the Indian debt market.
Our previous report discussed ICRA's placement of Dhansmruti Textiles Pvt Ltd in the “issuer non-cooperative” category because the company had not shared sufficient financial information for a rating review. The article explained that such a tag can negatively affect its credit profile, investor/lender confidence, and the terms and availability of future funding.
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