Reliance Home Finance stakes to go on sale

Rating agencies downgrade ADAG firms as bank payments delayed

MUMBAI: Reliance Capital (RCL) and Reliance Home Finance (RHFL) from the Anil Dhirubhai Ambani Group (ADAG) saw rating downgrades by Care Ratings and ICRA on Friday. This follows months of troubles faced by other ADAG firms in telecom and power sectors in terms of debt servicing and repayments. ADAG has now proposed to cut short term-debt in RCL by selling stakes in Reliance Nippon Asset Management, and sale of majority stake in RHFL to a strategic investor, to tide over the crisis.

Care has downgraded ratings for RHFL non-convertible debentures from ‘BBB+’ credit watch to ‘C Stable’, and long-term debt programme from ‘BBB+’ to ‘Care D’. ICRA has downgraded `1,200 crore Commercial Paper ratings from ‘A2’ to ‘A4’ following downgrade of various instruments of Anil Ambani-owned RCL and subsidiaries. The ratings continue to be on ‘Watch’ with Negative Implications, it said.
The key ratings drivers and rationale Care said it takes into account are the delays in servicing of bank facilities by the firm. “The liquidity profile of the group continues to be under stress on account of delay in raising funds from the asset monetisation plan and impending debt payments.” 

RHFL called the credit rating action “completely unjustified and inappropriate”. It said payments are regular and current, and it is working on securitisation of some loans. It admitted that RHFL has been “affected by a timing mismatch in regard to ongoing further securitisation/monetisation proposals with banks and the same has resulted in minor delay on principal repayments aggregating to only Rs 542 crore to around 5-6 banks, and limited only to its bank borrowings”.

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