Domestic rating agency Crisil on Thursday (Sep 10) said that close to two-thirds of its rated entities would qualify for one- time loan restructuring under the norms proposed norms by K V Kamath Committee as part of the resolution framework for Covid-19-related stressed assets.

The RBI recently accepted the recommendations of an expert panel led by former ICICI Bank chief K.V Kamath that came up with five key financial parameters that lenders have to take into account for finalising resolution plans for eligible borrowers across 26 sectors. These parameters relate to leverage, liquidity and debt serviceability.

The rating agency said it studied its rated portfolio of more than 8,500 companies after sorting them by rating, sector and moratorium availed. Nearly two-thirds of the companies rated by Crisil would be eligible for a one-time debt restructuring.

Subodh Rai, senior director, CRISIL Ratings, said, "Three out of four investment-grade companies (rated CRISIL BBB- or higher) and one out of two in the BB rating category qualify for restructuring of bank loans. However, in the CRISIL B category, only one in three qualify because companies here tend to have relatively weak debt protection metrics. At an aggregate Crisil portfolio level, two out of three companies were found eligible for restructuring, he added.

While the parameters support debt restructuring across rating categories, Crisil’s study indicated that companies in the resilient sectors stand to benefit more.

The agency assessed that three out of four rated ones in the resilient sectors such as construction, chemicals, pharmaceuticals, iron and steel manufacturing, corporate retail, and consumer durables/FMCG (fast moving consumer goods) will qualify for restructuring.

In the less-resilient sectors such as auto dealerships, gems and jewellery, hotels, restaurants and tourism, power generation, and real estate, the study said opportunities for debt restructuring could be a little lower as these sectors can take longer to recover. Here, only one in three companies could be eligible for restructuring.