Kathmandu: Following the Gen Z protests and subsequent events, the credit ratings of a dozen Nepali companies have been placed under close watch.
Rating agency ICRA Nepal has added “Watch with Negative Implications” to the ratings of six insurance companies, five companies that suffered physical damage, and two in the tourism sector.
ICRA said the recent turmoil has heightened risks for the general insurance sector. According to the agency, “including the reinsurer, six companies are expected to bear the majority of losses from the recent damages.”
ICRA had previously rated Nepal Reinsurance Company and Shikhar Insurance at ‘Double A Minus’, Sagarmatha Lumbini and Siddhartha Premier at ‘A’, NLG at ‘A Minus’, and United Ajod at ‘Triple B Plus’ issuer rating.
ICRA stated it will continue to monitor the financial profiles of these insurers and take necessary rating actions as needed.
Similarly, companies that suffered physical damages were also placed under “Watch with Negative Implications,” as their revenues are likely to decline and debt-servicing capacity may weaken.
Among them: CG Impex, which had sought a rating for Rs 3.9 billion in loans, was rated A3+; EOL (Rs 1.7 billion) rated A3; Bhatbhateni Supermarket (Rs 17.25 billion) rated A4+; Chandragiri Hills (Rs 2.14 billion) rated LBB+; and Maulakali Cable Car (Rs 1.42 billion) rated LBB–.
In the tourism sector, ICRA noted damages to infrastructure such as hotels and cable cars, saying this would impact Nepal’s tourism industry. It warned that incidents during peak tourist season could reduce foreign arrivals, shrinking the revenues of businesses reliant on international tourists.
As a result, Kailash Helicopter’s issuer rating of Triple B Plus and Oriental Hotels’ (Radisson Hotel) Rs 1.81 billion loan rating of A3+ were also placed under “Watch with Negative Implications.”
On 8 and 9 September, dozens of youths were killed during the protests and unrest, while government structures—including Parliament, Singha Durbar, the Supreme Court, and the President’s residence—were attacked. In the private sector, Bhatbhateni Supermarket, CG’s Satungal warehouse and data centre, Thapathali auto showrooms, and media houses, among others, were looted, vandalized, or set on fire.
Thousands of vehicles were also torched. ICRA said such damages are expected to cut revenues of affected businesses and increase insurance claims, prompting it to put the ratings under watch.
ICRA’s Business Head, Barsha Shrestha, explained that credit ratings reflect the risk in agreements between lenders and borrowers. “Ratings assess the ability of businesses to repay loans taken from banks,” she said.
“It shows whether the company can pay back from its operations even without relying on assets. Our assessment is that the damages caused by the Gen Z protests will weaken repayment capacity.”
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