Reliance Capital’s default rating puts group’s Rs93,900-cr NCDs at risk
23 Sep 2019
Care Ratings Ltd has downgraded the debt of embattled tycoon Anil Ambani’s Reliance Capital Ltd to default grade placing the conglomerate’s Rs93,900-crore ($13 billion) worth of non-convertible debentures at risk and thereby stocking up India’s Incorporated’s credit woes.
In a statement issued on 20 September, Mumbai-based Care revised Reliance Capital’s bonds downward by eight notches to D from BB, citing a delay in coupon payments on several of the lender’s non-convertible debentures.
That raises the default risk on the debt of the Reliance ADAG Group, which has ballooned to about Rs93,900 crore ($13 billion) at four of its biggest units.
Reliance Capital said in its statement the delay in coupon payments was caused by a “technical glitch in bank servers,” adding that the rating company did not give the lender the opportunity to provide comments on the downgrade.
Payment went through on the next working day after the delay, Reliance Capital said.
The downgrade “will precipitate a chain sequence of events that will gravely harm the interests of millions of retail and institutional investors having direct or indirect exposure to the securities of the company,” Reliance Capital said in an exchange filing on Saturday.
The default rating is set to exacerbate a year-long credit crunch among India’s shadow lenders, which started with the collapse of IL&FS Group last year.
Mumbai-based Reliance Capital has been trying to sell off assets to raise funds while its shares tumbled more than 90 per cent over the past year amid the cash squeeze.