Ratings agency CRISIL has downgraded its ratings on bank loan facilities and bonds issued by Transmission Corporation of Andhra Pradesh (AP TRANSCO) to default.
“CRISIL has downgraded its rating on bonds issued by Transmission Corporation of Andhra Pradesh Limited (AP TRANSCO) and guaranteed by the government of Andhra Pradesh to ‘CRISIL D’ from ‘CRISIL BB (SO)/Rating Watch with Negative Implications’,” a release issued by the agency said, pointing out that the downgrade reflects delays in debt servicing by AP TRANSCO.
According to CRISIL, post bifurcation of the state into Andhra Pradesh and Telangana, sharing of liabilities of AP TRANSCO has been under discussions with both the states for some time. Concerns of a likely dispute had heightened on account of potential differing stances being taken by the state governments on the sharing formula, it stated.
Anticipating a likely dispute between transmission corporations of Andhra Pradesh (AP) and Telangana, CRISIL had revised the ratings on bonds and bank loan facilities to ‘CRISIL BB(SO)’ and ‘CRISIL BB’, respectively, while keeping the ratings on ‘Rating Watch with Negative implication’.
“Now, CRISIL understands that due to continuing disputes relating to distribution of assets and liabilities, the interest payment on some of the rated bonds was not made in full by AP TRANSCO on the due date. The downgrade also factors in the failure of the payment structure and the inability of the trustee to ensure adherence to the trustee administered payment structure (non-invocation of guarantee),” CRISIL pointed out.
The downgrade on AP TRANSCO’s bank loan instruments is to meaningfully capture the higher likelihood of dispute with respect to servicing of debt obligations owing to lack of clarity on bifurcation of assets and liabilities, the ratings agency said.
For 2013-14, AP TRANSCO reported a profit after tax (PAT) of Rs 103 crore on total income of Rs 1,456 crore. In
2012-13, the PAT stood at Rs 417 crore on total income of Rs 1,724 crore, the ratings agency said.