Crisil lowers rating on NCDs of IL&FS subsidiary

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Published: January 23, 2019 1:08:15 AM

JRPICL is a subsidiary of IL&FS Transportation Networks (ITNL), and a part of the debt-laden IL&FS Group that owes banks and other lenders a whopping Rs 91,000 crore.

Crisil lowers rating on NCDs of IL&FS subsidiary

CRISIL on Tuesday downgraded its rating on the non-convertible debentures (NCDs) of Jharkhand Road Projects Implementation Company JRPICL) by three notches to D from BB. The rating continues to be on watch with negative implications. The rating action follows another downgrade last Friday when the NCDs were first downgraded three notches to BB from AA.

JRPICL is a subsidiary of IL&FS Transportation Networks (ITNL), and a part of the debt-laden IL&FS Group that owes banks and other lenders a whopping Rs 91,000 crore.

In a statement, CRISIL said, the downgrade is due to “significantly heightened risk of default due to a reversal in the management’s earlier stance of maintaining the integrity of JRPICL’s ring-fenced structure and structured payment waterfall”.

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In an order dated October 15, 2018, the National Company Law Appellate Tribunal (NCLAT) had granted a moratorium on all creditor actions against IL&FS as well as all of its group companies. Consequently, the JRPICL management, on January 4, 2019, wrote a letter to IDBI Trusteeship Services, the trustee of its NCDs, to stop further debits from the company’s escrow account to service debt obligations.

According to Mohit Chaudhary, managing partner at law firm Kings and Alliance, the company is misreading the NCLAT order. He told FE: “Moratorium does not mean stopping payments that are required and necessary for the company to carry on breathing and normal debt servicing. The moratorium means that creditors cannot bring any action against it in a court of law.”

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