India Ratings expects rise in commercial vehicle loan defaults

IndiaRatings expects rise in commercial vehicle loan default
According to India Ratings, the sluggish freight demand and overall downturn in the economy may result into rise in defaults of commercial vehicles loan, said the media report.

"India Ratings believes that delinquencies in commercial vehicle (CV) loan space could increase in the next quarter. Our projection is based on early delinquency index rising to 6.51 per cent in the second quarter from 5.71 per cent in Q1," the ratings agency said in a report.

The profitability of CV operators and their ability to service debt continue to suffer as the index of industrial production is shrinking continuously for the past many months, it said. "India Ratings observed early signs of stress in 2013 vintage CV loans in the June quarter with weighted average delinquencies reaching 1.45 per cent within five months of average seasoning," the report said.

However, the delinquencies remain within the agency's expectations and are unlikely to result in any stress on transactions' rating, the report said.

Dion Global Solutions Ltd.

Story first published: Thursday, September 12, 2013, 9:10 [IST]
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