scorecardresearch
Friday, March 29, 2024
Support Our Journalism
HomeEconomyReliance Capital protests downgrade, says it will cut debt 50%

Reliance Capital protests downgrade, says it will cut debt 50%

Care Ratings has cut the firm’s long-term debt program to BBB from A and kept it on credit watch.

Follow Us :
Text Size:

Reliance Capital Ltd., Anil Ambani’s financial services company, protested against a three-step downgrade by Care Ratings that put its credit score two notches above junk.

Care Ratings cut the firm’s long-term debt program to BBB from A and kept it on credit watch with developing implications, according to statements from Reliance Capital and the rating company on Saturday. Reliance Capital said it disagreed with the revision as Care didn’t fully factor in the impact of its plan to raise more than 100 billion rupees ($1.42 billion) via asset sales and “sharply cut” overall debt by more than half this financial year.

“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 four weeks ago and hence latest revision is completely unjustified,” Reliance Capital said in its statement.

Reliance Capital is in the process of selling its holdings in several assets to raise funds including its entire stake in Reliance Nippon Life Asset Management Ltd., where it expects to realize a premium over the current market price of more than 50 billion rupees, according to the statement. The financial services firm is the last stronghold in embattled tycoon Anil Ambani’s phone carrier-to-power empire, which has been beset by financial woes that earlier this year threatened to land the businessman in jail.

“The company has been working diligently to ensure timely debt repayments and is regular in all its debt payments,” Reliance Capital said.


Also read: Anil Ambani needs $2 billion in asset sales to save his last bastion – Reliance Capital


In downgrading its credit score, Care cited developments including defaults by subsidiaries Reliance Home Finance Ltd. and Reliance Commercial Finance Ltd., which would likely reduce the group’s financial flexibility and diminish Reliance Capital’s ability to raise funds from the market.

Reliance Capital’s “financial risk profile is characterized by depletion of liquidity, high dependence on planned disinvestments for debt servicing and delays in fructification of such disinvestments,” Care said in its statement. The rating company said it will closely monitor the asset-sale process and Reliance Capital’s ability to complete this in a timely manner, reduce debt and maintain liquidity would act as “key rating sensitivities.”- Bloomberg

Subscribe to our channels on YouTube, Telegram & WhatsApp

Support Our Journalism

India needs fair, non-hyphenated and questioning journalism, packed with on-ground reporting. ThePrint – with exceptional reporters, columnists and editors – is doing just that.

Sustaining this needs support from wonderful readers like you.

Whether you live in India or overseas, you can take a paid subscription by clicking here.

Support Our Journalism

1 COMMENT

  1. Let this thief ist get/raise the amount and payoff debt .only then he can ask for regrading. Otherwise for public safety(investment) hosting b what it is.

LEAVE A REPLY

Please enter your comment!
Please enter your name here

Most Popular