IIFL Finance Faces Downgrade Risk On Gold Loan Ban

(Bloomberg) -- Indian shadow lender IIFL Finance Ltd. is facing a threat of credit rating downgrade as early as this week, as a months-long regulatory ban on its gold loan business remains unresolved, according to people familiar with the matter.

A local rating agency has informed the company about a possible rating change from AA to AA-, said the people, who asked not to be identified as the information is private.

A potential downgrade may pressure the firm’s borrowing channels as funding costs could grow, and lenders could ask for early repayment from the beleaguered non-banking finance company which is already navigating a business contraction.

IIFL Finance shares extended a decline to as much as 5.8%, the most in over a month, after Bloomberg News reported on the possible rating downgrade. Overall Indian stocks were higher.