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Bond Market News
Muthoot Upgraded to BB+ on Improved Credit Profile
August 25, 2025
Muthoot Finance (MFL) was upgraded to BB+ from BB by Fitch, on the back of sustained improvement in credit profile, competitive advantages, business profile and risk management. Fitch also highlighted Muthoot’s experienced management, limited credit losses, profitability, diversified liquidity profile supported by short-tenor loans and greater regulatory clarity on gold-back lending requirements. Gold loans accounted for 86% of Muthoot’s portfolio in FY2025, with net interest margins steady at 11.5%. Fitch noted that the company maintains conservative loan-to-value ratios of 61–65%, well below the regulatory ceiling of 85%, helping to mitigate collateral price risks. Asset quality remains solid, with an NPL ratio of 2.6% as of June 2025, supported by recoveries from gold collateral. Fitch also cited Muthoot’s improved funding and liquidity. Muthoot has diversified its borrowings, with 12% from foreign sources, 30% from capital markets, and 55% from banks. Debt-to-tangible equity rose to 3.3x in FY2025 from 2.7x in the prior year, but remains moderate and supported by strong internal capital generation. Fitch expects stable yields, easing borrowing costs, and healthy credit demand to sustain profitability in the medium term.
Muthoot’s 6.375% 2029s are trading stable at 100.7, yielding 6.14%.
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