Crisil said in a release that the ratings were solely based on the unconditional and irrevocable guarantee extended by ICICI for servicing all interest payment and principal repayment obligations on the rated debt along with a payment mechanism built in to ensure timely payment of obligations on the rated instruments.

"The bond issues of Reliance Telecom have been contemplated for network-capacity creation in the basic and cellular telecom circles licensed to the company. Accordingly, all interest payment and principal-repayment obligations on the rated debt are backed by ICICI through an unconditional and irrevocable guarantee."

The credit-enhancement mechanism specified by Crisil to ensure timely payment of obligations says that the there has to be a guarantee agreement by ICICI in favour of the trustee to the debenture holders, a tripartite "no-lien account agreement between Reliance Telecom and ICICI Bank (with whom the non-lien account in maintained) and the trustee and lastly a debenture trust deed between Reliance Telecom and the trustee.

According to the credit-enhancement mechanism, Reliance Telecom is required to transfer an amount equivalent to the forthcoming interest and principal-payment obligations on the rated instruments into the no-lien account at least 10 business days before the payment becomes due and payable.

The mechanism further states that the trustee is required to monitor the balances in the no-lien account to ensure that at least 10 business days prior to every due date for payment of interest and or principal installment, adequate funds are available for servicing of financial obligations under the rated instruments.

The mechanism says that in the event if a shortfall in the no-lien account on the 10th business day prior to any due date for payment of financial obligations on the rated debt, the trustee would inform the guarantor about the inability of the issuer to fund the specified account and the guarantor is required to meet the financial obligations due to the debenture-holders on the due date.