S&P Global Ratings and Moody's assigned first-time ratings to India's Muthoot Finance Ltd.
Ratings assigned the nonbanking financial company a BB long-term and B short-term issuer credit ratings, with a stable outlook on the long-term rating. Moody's assigned the company a first-time Ba2 corporate family rating. The outlook on Moody's rating is stable.
The rating agencies said in separate Oct. 10 releases that the ratings are backed by Muthoot Finance's established gold loan business in India and strong capital levels and profitability. Both agencies said the company's assets and liabilities are well matched, despite its heavy reliance on short-term funding.
In addition, monthly collections from its gold loan business and the disbursement of loans are fairly matched, reducing pressure on liquid assets for balance sheet growth, Moody's said.
Muthoot Finance, however, is exposed to economic risk in India, and face additional regulations such as loan-to-value restrictions, Ratings said. It also has higher capital requirements for lending against gold.
Ratings expect the company to largely maintain its financial profile in the next 12 to 18 months despite the challenging environment in its main market.
Muthoot Finance has a market share of about 18% among banks and nonbanks in the gold loan industry as of March 31, 2018, according to Moody's.
This S&P Global Market Intelligence news article may contain information about credit ratings issued by S&P Global Ratings. Descriptions in this news article were not prepared by S&P Global Ratings.
