The repayment schedule of the guaranteed debt has not yet been provided by the company, Care Ratings said.
Care Ratings has placed Reliance Capital’s `21,000-crore debt borrowings with ‘BBB’ ratings on credit watch with negative implications on account of the likely utilisation of part proceeds of divestments to meet debt obligations, the debt-laden asset management company informed the exchanges on Saturday.
These borrowings include long-term debt instruments of `18,000 crore, subordinate debt of `2,000 crore and market-linked debentures of `1,000 crore. However, Reliance Capital disagrees with the revision.
“There has not been any adverse change in the company’s operational parameters and/or any other circumstances from the time of the last rating action, just seven weeks ago, and hence the latest revision is completely unjustified,” the company said in an exchange notice.
As per the earlier commitment of the management, the entire proceed from the divestment process – major ones being Reliance Nippon Asset Management and Reliance General Insurance – was to be only utilised for making repayments/prepayments of debt at standalone RCL level. The move is expected to substantially reduce the debt levels by end of FY20.
The repayment schedule of the guaranteed debt has not yet been provided by the company, Care Ratings said. Care further said RCL’s financial risk profile is characterised by depletion of liquidity and high dependence on planned disinvestment for debt servicing.