More NBFCs to look for offshore financing in 2020: Fitch Ratings

The international ratings agency, Fitch Ratings expects more of India's non-bank financial companies (NBFC) to look for offshore financing in 2020 as local funding conditions are likely to remain under pressure.

"However, we expect offshore access to be confined to larger entities with stronger credit fundamentals," the agency said in a statement on Tuesday.

"India's weaker macroeconomic backdrop is likely to add to the existing funding, growth and asset-quality strains weighing on the Indian NBFC industry as a whole, underpinning our negative outlook for 2020."

According to the agency, the offshore route would allow better-placed NBFCs to further diversify funding sources after fairly volatile domestic liquidity conditions over the past year, enabling them to capture relative funding-cost benefits and exploit growth opportunities.

The statement said: "We believe that funding conditions within the domestic market will remain relatively tight for NBFCs overall, notwithstanding some improvement since the failure of Infrastructure Leasing & Financial Services (IL&FS) in late 2018.

"Adding to the liquidity challenges, some NBFCs have a greater sensitivity to higher-risk sectors that will be affected by the slowing economy."