IIFL Finance has allotted 2250 Secured, Redeemable, Non-Convertible, Rated, Listed, Taxable Bonds in the nature of Debentures of face value of Rs 10 lakh each aggregating Rs 225 crore on private placement basis.

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The stock has added 7.7% in three sessions while the benchmark S&P BSE Sensex has advanced 4.5% during the same period.

Currently, the stock is trading 61% below its 52-week high of Rs 212.80 hit on 14 February 2020. It has gained 42.7% from its 52-week low of Rs 58.15 recorded on 3 June 2020.

Meanwhile, the credit ratings agency Moody's Investors Service has downgraded IIFL Finance's corporate family rating (CFR) to B2 from B1, senior secured debt rating to B2 from B1, and senior secured medium-term note (MTN) program rating to (P) B2 from (P) B1. The rating outlook has been changed to stable from rating under review.

The downgrade of IIFL Finance's ratings reflects Moody's expectation that the company's asset quality and profitability will deteriorate as loan delinquencies and defaults increase. This weakening will be driven by declining earnings and cash flow at its customers due to the deep coronavirus-led economic contraction.

Loans to small and medium-sized enterprises (SMEs), real estate developers and micro-finance companies - segments that represent about 40% of its assets under management - are at the greatest risk of a deterioration in asset quality, given the disruption to their business activities and their limited balance sheet liquidity. At the end of June 2020, about 50% of these loans were subject to repayment moratoriums, compared to about 30% for IIFL Finance's total loan book.

In line with its industry peers, Moody's expects IIFL Finance will restructure loans to borrowers whose businesses and earnings have been affected by the coronavirus outbreak.

IIFL Finance's capital remains stable as the company has slowed loan growth in response to the contraction in economic activity and to conserve liquidity.

The stable outlook reflects Moody's expectation that IIFL Finance will continue to perform in line with that of its B2 CFR peers over the next 12-18 months, with its stable capitalization providing resilience against weakening profitability and asset risk.

In addition, Moody's expects ongoing deleveraging due to lower originations to result in reduced refinancing needs.

The ratings agency said that given the stable outlook, IIFL Finance's ratings are unlikely to be upgraded over the next 12-18 months. Nevertheless, Moody's could revise the rating outlook to positive if the company strengthens its liquidity by refinancing or raising new funding, strengths its loss-absorbing buffers by raising equity capital or if the operating environment improves, supporting strengthening of the asset quality.

IIFL Finance offers a wide spectrum of products such as home loan, gold loan, business loan, microfinance, capital market finance and developer & construction finance.

The company's consolidated net profit tumbled 81.8% to Rs 31.84 crore on 5.7% increase in total income to Rs 1,276.55 crore in Q1 June 2020 over Q1 June 2019.

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Fitch Ratings has taken rating action on the Long-Term Issuer Default Ratings (IDR) of four Indian non-bank financial institutions(NBFI) in light of the companies' performance amid the coronavirus pandemic. The rating actions are as follows:

- IIFL Finance 'B+' rating maintained on Rating Watch Negative (RWN)

- Manappuram Finance (MFIN), affirmed at 'BB-'; RWN removed; Outlook Stable

- Muthoot Finance (MFL), affirmed at 'BB'; RWN removed; Outlook Stable

- Shriram Transport Finance Company (STFC), affirmed at 'BB'; RWN removed; Outlook Negative

The RWNs on the bond ratings of MFIN, MFL and STFC have also been removed.

The companies' Long-Term IDRs were placed on RWN in March this year, as Fitch expected the pandemic to present further macroeconomic and funding challenges for the entities, heightening downside risk to their credit profiles.

IIFL Finance's rating remains on RWN due to continued uncertainty on its funding and liquidity, with trends potentially becoming more evident within the next six months. This is despite a steady improvement in collections over the past few months and easing fundingconditions, which have partly benefited from government support measures for NBFIs and other parts of the economy.

The removal of the RWN and Stable Outlooks on MFIN and MFL's ratings reflect the entities' generally resilient performance in the face of significant economic disruption amid local measures to contain the pandemic.

The RWN on STFC's ratings has been removed, as we believe near-term operational uncertainty is easing for the entity. However, the Negative Outlook highlights the ongoing downside risk to asset quality and the implication for the company's funding and liquidity, which we expect will only become apparent in the medium term.

The ratings on the entities' medium-term note (MTN) programmes and foreign-currencysenior debt are at the same level as the Long-Term Foreign-Currency IDRs, while STFC'srupee-denominated senior debt is rated at same level as its Long-Term Local-Currency IDRin accordance with Fitch's rating criteria.

Fitch has assigned a Recovery Rating of 'RR4' to IIFL Finance's senior secured debt inaccordance with Fitch's criteria for entities with a Long-Term IDR of 'B+' or below. TheRecovery Rating reflects Fitch's expectation for 'Average' recovery prospects fornoteholders in the event of a default.

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IIFL Finance has allotted 27,510 Equity Shares to the employee(s) of the Company on exercise of stock options under Employee Stock Option Scheme(s).

Upon allotment, the equity base of the Company stand increased from 37,83,68,057 to 37,83,95,567 Equity Shares of Rs. 2/- each.

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