Moody’s has downgraded the rating outlook of Reliance Communications (RCom) to ‘negative’ due to uncertainty over the timing and completion of the restructuring it has announced as well as the company’s high debt. Moody’s Investors Service said it has downgraded RCoM’s corporate family rating and senior secured bond rating to ‘B2’ from ‘B1’. The rating outlook is negative.
“The downgrade primarily reflects our expectation that RCOM’s leverage – as measured by consolidated debt (including Moody’s adjustment for spectrum liabilities)/Ebitda – will remain above 7.0x over the next 6-9 months while the company pursues regulatory, shareholder and debt holder approvals for its announced restructuring, including the de-merger of its wireless business and sale of its tower assets,” Moody’s vice-president and senior credit officer Annalisa Di Chiara said.
For the quarter ended September 2016, RCoM had reported a net debt of Rs 42,701.60 crore.
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“The company reported EBITDA of around $1 billion for the 12 months to September 2016, while adjusted debt (includes Moody’s adjustments for spectrum related liabilities) stood at approximately $7.5 billion with limited scope for de-leveraging absent successful execution around asset sales and divestments,” Moody’s said.
The agency said it expects RCom’s EBITDA from Indian operations that contribute around 85% of EBITDA to remain under pressure over the next 6-12 months in light of the intensifying competition in India’s mobile sector.
RCoM’s liquidity position remains weak, Moody’s said.
The negative outlook primarily reflects “(1) the uncertainty regarding the timing and completion of the announced restructuring; and (2) the resultant range of leverage and business risk profiles if one or both transactions are delayed or cancelled,” the global ratings agency said.
Lodha Developers rating downgraded to B2 from B1
Moody’s Investors Service has downgraded the corporate family rating of realty firm Lodha Developers (LDPL) to B2 from B1, citing reasons of weak liquidity position and high refinancing risk for such rating.
It has also downgraded the senior unsecured debt rating of the US dollar denominated bonds issued by Lodha Developers International and guaranteed by Lodha Group to B2 from B1. The negative outlook reflects the high refinancing risk, weak liquidity position and the challenging operating environment for real estate companies in India, the agency said.