Icra downgrades NCDs of Piramal Realty

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Published: July 11, 2019 1:40:00 AM

The data from Value Research show that as on May 2019, Franklin India Ultra Short Bond Fund invested Rs 350.15 crore in the debt instrument of Piramal Realty.

The data from Value Research show that as on May 2019, Franklin India Ultra Short Bond Fund invested Rs 350.15 crore in the debt instrument of Piramal Realty. (Website Image)The data from Value Research show that as on May 2019, Franklin India Ultra Short Bond Fund invested Rs 350.15 crore in the debt instrument of Piramal Realty. (Website Image)

Rating agency Icra has downgraded the long-term rating assigned to non-convertible debentures (NCDs) of Piramal Realty to ICRA A+(SO) from ICRA AA-(SO), amounting to Rs 350 crore.

According to the rating agency, the outlook on the long-term rating continues to remains negative.

The revision in rating for the NCD programme is driven by the deterioration in the operating environment owing to tight liquidity in the market that may diminish the ability of holding companies to raise funds from the market against the market value of its listed investments.

The data from Value Research show that as on May 2019, Franklin India Ultra Short Bond Fund invested Rs 350.15 crore in the debt instrument of Piramal Realty.

Instruments with this rating, ICRA A(SO), are considered to have adequate degree of safety regarding timely servicing of financial obligations and such instruments carry low credit risk. ‘SO’ stands for structured obligation.

Icra in its report said the NCDs of Rs 350 crore are backed by an unconditional, irrevocable and continuing guarantee by the Sri Krishna Trust (SKT) that would cover all obligations that may arise on the rated NCDs. SKT is one of the key holding entities of the Piramal group. Another holding entity, PRL Realtors (PRL), has recently extended guarantee on the NCD programme.

The two major holders in the parent company, Piramal Enterprises, hold 39.6% and 4.5%, respectively. Piramal Enterprises has a consolidated debt of `56,023 crore on its book as of March 2019, Bloomberg data showed.

In the last week of June, Icra had downgraded the long-term rating of Piramal Capital & Housing Finance.

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