Half of top 500 corporate borrowers could be going for refinancing this year, says report

A recent report says that nearly half of the top 500 corporate borrowers could be under the risk of refinancing debt worth Rs 1.4 trillion this year.

"As many as 240 of the largest 500 corporate borrowers, contributing Rs 11.8 trillion to the total debt of Rs 28.1 trillion corporate loans, are exposed to significant risks of refinancing worth Rs 1.4 trillion debt this year," said in a report from India Ratings.

As per this report, these 240 entities are under elevated risk of refinancing (ERR) and stressed categories, with nearly Rs 5.1 trillion debt falling under the stressed category and another Rs 6.7 trillion falling under ERR.

Also, around 80% (Rs 1.7 trillion) of the refinancing requirements this year stems from a total of 100 entities, out of which 39 have a debt of Rs 52,700 crore belonging to the stressed category and 33 have a debt of Rs 60,000 crore belonging to the ERR category.

"The entities in the ERR category whose total asset coverage ratio or interest cover ratio are below 1x will face difficulties in debt refinancing, given banks' (especially public sector banks) risk aversion to such stressed assets and capital unavailability," the report said.

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