S&P Global Ratings has lowered the long-term corporate credit rating of Rolta India to default (D) from selective default (SD) due to missed interest payment.
“We downgraded Rolta because the company failed to pay the USD 6.8 million interest due on its 2018 senior unsecured guaranteed notes, even after the expiry of the 30-day grace period,” S&P
Global Ratings Credit Analyst Ashutosh Sharma said in a statement today.
The ratings agency had lowered its rating from ‘B+’ to ‘CCC-minus’ and then, SD (selective default) at the beginning of the month.
The agency has also lowered its long-term issue rating on the 2018 senior unsecured notes issued by Rolta to ‘D’ from ‘CC’.
“Our ‘CC’ issue rating on the 2019 senior unsecured notes issued by Rolta Americas LLC remains on CreditWatch with negative implications. Both sets of notes are guaranteed by Rolta,” it said.
Rolta has said it is “diligently working” on addressing the working capital stress it is facing on account of delayed payments.
The company, which works majorly with Indian government agencies, has delayed a coupon payment of USD 6.8 million on a USD 127 million foreign currency bond issue due in 2018 that was scheduled to be made last month.
It had earlier failed to make payments on a USD 35 million loan.
“The management had expected the trustee to make the coupon payments from its interest reserve account, but that hasn’t happened yet… We believe a default on Rolta’s 2019 senior unsecured guaranteed notes is almost certain because the company has not shared any detailed plan for repayment with us,” Sharma said.
The CreditWatch on the 2019 guaranteed notes reflects that these notes are highly vulnerable to a default, the rating agency said.
“We will lower our rating on these notes to ‘D’ if Rolta fails to pay its coupon as it comes due… We will resolve the CreditWatch if Rolta makes the necessary payments on all its debts and provides a credible plan to meet its debt obligations over the next six months,” it added.
Rolta said it had to continue incurring significant expenses on a very prestigious and time-bound defence project, which requires considerable ongoing investment.
“At the same time, the company has suffered unexpected delays in large payment collections; thereby facing working capital stress over the past few months,” Rolta had said.
As a result, Rolta has been unable to meet its recent obligations towards interest payment on Bonds/ECB installment, it added.
Ratings agency Fitch has also cut Rolta’s rating to RD or restricted default from CC.