ICRA Nepal has downgraded the long-term and short-term loan ratings of Varnabas Museum Hotel Limited (formerly Varnabas Museum Hotel Private Limited) and moved the company to the ‘Issuer Not Cooperating’ category, placing the ratings on notice for withdrawal as of December 3, 2025.
The long-term loan rating of the hotel was revised to [ICRANP] LC+ “Issuer Not Cooperating” from the previous [ICRANP] LB-, while the short-term loan rating was moved to [ICRANP] A4 “Issuer Not Cooperating” from [ICRANP] A4. The rating action reflects the limited cooperation received from Varnabas Museum Hotel Limited despite repeated follow-ups by ICRA Nepal for updated financial and operational information.
Reasons Behind the Downgrade
The downgrade primarily considers uncertainties surrounding the company’s financial and operational profile. The hotel had reported lower occupancy levels till 10.5MFY2025. Furthermore, the property suffered damage during the recent protests and riots on September 8-9, 2025, raising concerns about its overall credit risk.
Due to the lack of updated financial statements and operational reports, ICRA Nepal could not fully ascertain the impact of these events on the company’s performance. The agency emphasized that the ratings may not adequately reflect the current credit risk profile, and market participants are advised to exercise caution.
ICRA Nepal’s Assessment Process
ICRA Nepal undertakes its rating assessment in line with the Credit Rating Regulations 2011 and the agency’s ‘Withdrawal/Suspension Policy’. Despite repeated attempts to obtain comprehensive information from the hotel management, the company provided only partial responses. In the absence of timely and complete information, ICRA Nepal based its ratings on the best available data, following regulatory guidelines. The agency also highlighted that lenders, investors, and other stakeholders should consider that the hotel’s credit risk may differ from what the rating symbol currently represents.
About Varnabas Museum Hotel Limited
Incorporated in June 2018 as a private limited company and converted into a public limited company in August 2024, Varnabas Museum Hotel Limited operates a 5-star luxury hotel in Nepal. The hotel, themed around Nepal’s diverse ethnic groups (Varnas), began operations in February 2024, with different floors representing the artifacts and lifestyle of each ethnic group. The hotel is the first venture of Mr. Rajendra Bajgain, the major shareholder, and a tourism sector entrepreneur with over 20 years of experience.
Analytical Approach and Methodology
ICRA Nepal applied its standard Corporate Credit Rating Methodology and Issuer Not Cooperating Guidelines while reviewing the company’s ratings. The agency has also provided links to its previous rating rationale and assessment criteria for reference.
ICRA Nepal Limited, licensed by the Securities Board of Nepal (SEBON) in October 2012, is Nepal’s first credit rating agency. It operates as a subsidiary of ICRA Limited, India, which provides technical support in rating methodologies, analytical software, research, training, and skill development.
ICRA Limited, established in 1991, is an independent credit rating agency backed by leading financial institutions, commercial banks, and investment companies in India. Together with its subsidiaries, it forms the ICRA Group of Companies.
