Hong Kong: Borrowing conditions for Indian companies will likely remain tough for months as fallout from defaults at Infrastructure Leasing & Financial Services Ltd. continue to weigh on the nation’s debt market, according to S&P Global Ratings. “India’s financial markets are facing a trust deficit," S&P credit analyst Geeta Chugh wrote in a note. “The disruption could put a strain on weaker companies as well as finance companies."

Spreads have widened and short-term borrowing costs have spiked since IL&FS failed to meet debt obligations in August and September, while corporate governance concerns are adding to risk aversion, S&P said. While rated companies are better placed to withstand the stress, non-bank finance firms and mortgage lenders are most vulnerable to the cash crunch because of their reliance on short-term debt, according to S&P.

“Costlier or restricted financing could delay some growth plans and hurt profitability," the report said.