CRISIL, majority owned by S&P Global, bought a 8.9 percent stake in rival CARE Ratings for Rs436 crore, expanding into the country’s ratings business at a time of surging corporate bond issuance.
CRISIL said it bought the stake from Canara Bank. The investment comes as corporate bond issuance done through private placements jumped 42.9 per cent to Rs7 lakh crore in the year ended March 2017, from the previous year.
The company said India’s ratings sector would continue to benefit from increased issuances of bonds and loans because of rising capital investments and infrastructure financing. “This stake purchase is an investment in the excellent long-term prospects of the credit rating sector in the country,” CRISIL said in a statement.
CARE is the only of India’s four major ratings agencies to be independently owned, with no affiliation to S&P, Moody’s Investor Service, or Fitch Ratings.
Although rating agencies have benefitted from corporate bond issuances, the sector is also facing increased scrutiny from markets regulator Securities and Exchange Board of India (Sebi) over concerns they took belated action in a slew of recent corporate bond defaults.
“This investment in the equity of CARE has no special rights and is in compliance with applicable rules and regulations,” said Ashu Suyash, managing director & chief executive officer, CRISIL, in a statement.
Shares of CRISIL gained 1.24 per cent, while that of CARE Ratings soared 13 per cent. The benchmark Sensex, in comparison, ended 0.08 per cent up.
“The prospects for the sector are driven by the significant demand for capital investments and infrastructure financing in India over the long term, much of which should benefit the sector,” she said.
Source: Business-Standard