Fitch downgrades SREI

Fitch Ratings said it downgraded SREI Equipment Finance Pte. Ltd.'s national long-term rating, Rs. 12.5 billion of senior debt and Rs. 3.4 billion of lower tier 2 subordinated debt to Fitch AA-(ind) from Fitch AA(ind). The national short-term rating was affirmed at Fitch A1+(ind). The outlook is negative.

The agency said the downgrade reflects SREI's declining Fitch core capitalization, which is inconsistent with non-bank financial institutions rated Fitch AA(ind) in India.

The negative outlook reflects risks of greater reliance on short-term funding - and funding is already less diversified compared to rated peers - due to sustained growth of medium/longer-tenor equipment finance loans, Fitch said.

The ratings also factor in SREI's dominant market position in the equipment finance business and a track record of stable financial performance, the agency added.

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