As their funding costs have risen, NBFCs have increased interest rates for loans against property (LAP) to small and medium-size enterprise borrowers, which is heightening repayment and refinancing risks for these loans. "This situation is credit negative for Indian asset-backed securities (ABS) backed by LAP," Moody's said. The credit rating agency said the slowing property price growth is curtailing recovery prospects. "The pace of property price growth has slowed in major Indian cities as a result of rate rises over the past year. Slower property price growth has reduced recovery prospects for defaulted LAP, which is negative for Indian ABS backed by these loans. Additionally, slower property price growth has eroded lenders' willingness to refinance LAP," Moody's said. Delinquencies will increase, but structural protections will curb deals' exposure to losses.