Banking

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P.K. Venkatesan (Querist)
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14 November 2013 A company has been down graded from BBB(-) to DD by crisil what are the implication we can expect from various sources.
Can some expert give his valid opion.

Nikhil Kaushik

Nikhil Kaushik (Expert)
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14 November 2013 well, if listed, shares prices will take a nice plunge..

banks would reconsider their loan exposure to the company.

Cost of borrowing will increase exponentially.

customers who are critically dependent on the company would became cautious and if their fears are not assuaged, they may start looking for other suppliers.

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Nikhil Kaushik

Nikhil Kaushik (Expert)
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14 November 2013 and remember these days banks are a bit finicky about the rating downgrades. So they can be very nasty.

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P.K. Venkatesan

P.K. Venkatesan (Querist)
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15 November 2013 Dear Mr. Nikhil, Thanks for your repl, there is a small change in the parameters now it is from BBB- to BB+. If so how the impact will be on the borrowings of the company. Basically I am trying to understand the various parameter impacts.

Thanks for sharing your knowledge.

Best Regards

Venkat

Nikhil Kaushik

Nikhil Kaushik (Expert)
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15 November 2013 well this rating downgrade reflects shift from moderate safety to moderate default risk. So banks may like to review their exposures. Marginal increase in cost of borrowing is possible.

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