India Ratings and Research (Ind-Ra) revised the outlook for PNB Housing Finance (PNBHF) non-convertible debentures (NCDs) from negative to stable while confirming the rating at AA.
The size of the problem is Rs 15,517 crore, up from Rs 21,897 crore earlier.
Ind-Ra said the revised outlook reflects additional uncertainty around the timing and amount of PNBHF’s fundraising, which could be critical given the stress in the loan portfolio, particularly on wholesale loans. . This, if supported, may require stronger strain absorbing pads.
The additional capital is also important to support the growth of PNBHF loans without significantly increasing financial leverage.
On February 20, PNBHF declared that its promoter Punjab National Bank would no longer inject capital into the company and that it would seek to raise Rs 1.8 trillion crore. via a qualified institutional placement, a preferential issue, a rights issue or a combination in one or more slices.
The promoter had previously indicated that he would infuse Rs 500 crore to Rs 600 crore and was awaiting approval from the Reserve Bank of India to complete the same.
“While the improvement in the valuation of PNBHF bodes well, the promoter’s decision not to inject more capital raises the prospects of a significant dilution of the shareholding of its promoter which could have a wider ramification” , said Ind-Ra.
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