Global rating agency Standard & Poor’s today lowered its long-term corporate credit rating on Rolta India Ltd to’CCC-‘ from ‘B+’ for missing on interest payment on unsecured notes.
At the same time, S&P lowered long-term issue rating on the senior unsecured notes that Rolta Americas LLC and Rolta LLC issued to ‘CCC-‘ from ‘B+’.
Rolta, an India-based information technology (IT) products and solutions provider, guarantees the notes.
“We lowered the rating on Rolta because the company missed a $6.8 million interest payment on its 10.75% 2018 unsecured notes,” S&P Global Ratings credit analyst, Ashutosh Sharma, said.
The payment was due on May 16, 2016.
“We are also uncertain of the company’s ability to meet its interest payment. We understand that Rolta intends to make the payment within the 30-day grace period ending on June 15, 2016,” he said.
“However, we do not have any information on the company’s current liquidity position, which seems to have unexpectedly deteriorated,” Sharma said.
“We believe the lack of proactive communication from the Rolta management on his unexpected development reflects a weaker efficacy of the company’s management and governance, he said.
The CreditWatch on Rolta reflects a one-in-two likelihood that we could lower the ratings in the next three months, Sharma added.
This reflects the uncertainty whether the company will be able to make the coupon payment on its notes within the allowed grace period.
“We will lower the ratings to ‘SD’ if Rolta fails to make the payment on the bonds within the grace period. We will lower the ratings to ‘D’ if Rolta misses the interest payment within the grace period…” he said.
S&P will raise the ratings if Rolta makes the interest payment on the notes within the grace period.
“We believe the company has a credible plan to meet its debt obligations over the next six to 12 months,” Sharma.