KFC gets its rating upgrade for bonds, bank borrowings

Kerala Financial Corporation (KFC), one of the leading State Financial Corporations in the country, got its rating upgrade for bonds and bank borrowings.

Brick Work Ratings for the Non-Convertible Debentures (NCD) backed with Government guarantee aggregating to Rs 400 crore got upgraded from BWR A- (SO) to BWR A (SO) and bank loans from BWR A- to BWR A, signifying a stable outlook for the Corporation, an official release said here on Saturday.

The existing NCD issues without Government guarantee of another Rs 500 crore have been reaffirmed AA (SO) and the proposed NCD issue of Rs 250 crore has also been assigned AA (SO) by the RBI/ SEBI accredited rating agencies Brickwork and Acute deriving strength of the credit enhancement from the structured payment mechanism available.

The rating has factored, interalia, continued support from State Government, improvement in the gross NPA and net NPA levels, provision coverage available and healthy capital adequacy. Moreover the upgrade is on the basis of the improvement in the financial profile of the financial institution.

KFC has been in the bond market since 2011 and successfully launched five NCD issues which underline the confidence and trust of investors.

KFC is the only State PSU of Kerala to raise fund from bond market without Government guarantee.

Dr Thomas Isaac, Kerala Minister for Finance and Coir, has announced in his Budget Speech 2019 that KFC will be raising Rs 500 crore additionally from market.

"The rating upgrade reflects the financial discipline and improved profitability of the corporation. The corporation plans to tap the market again before the end of this FY 2018-2019 if the market moves favorably", KFC Chairman and Managing Director Sanjeev Kaushik said.

"Since the time the credit policy of the Corporation has been revamped with centralised proposal clearing system and project appraisal done through centralised hubs, the quality of loans has been improved drastically."

"The MSME sector of the state has been  boosted by offering lowest rates under the revised regime of 9.5 per cent base rate system  and has benefited thousands of entrepreneurs of the State", Mr Kaushik said.