Moody’s withdraws RCom ratings after firm misses interest payment

Any missed payment considered default, says rating agency

A man opens the shutter of a shop painted with an advertisement of Reliance Communications in Mumbai, India, November 3, 2015. India's crowded telecoms sector is preparing for a long-awaited shake-up as highly indebted players jostle for access to costly airwaves and brace for the launch of a deep-pocketed new rival backed by India's richest man, Mukesh Ambani. Ambani owns oil-to-retail conglomerate Reliance Industries, which is expected to begin offering fast data services across India by early 2016. REUTERS/Shailesh Andrade

Moody’s Investors Service has withdrawn Reliance Communications Limited’s (RCom) Ca corporate family rating (CFR) and its negative outlook after the company defaulted on interest payment to bondholders. The rating agency has also withdrawn the Ca rating on RCom’s senior secured notes, Moody’s said in a statement.

On November 6, RCom announced that pursuant to the invocation of Strategic Debt Restructuring (SDR)scheme by the lenders of the company as per the Reserve Bank of India guidelines agreed in June 2017, the company “is under a debt standstill period until December 2018, as it looks to complete an exercise in corporate and debt restructuring.” A statement from RCom had added, “For the time being, no payment of interest and/or principal is being made to any RCom lenders or bondholders.”

The semi-annual interest payment on its $300 million senior secured bond was due on November 6. According to the indenture, the company had a seven-day grace period, after which an event of default would occur. Moody’s has withdrawn the ratings as a missed scheduled payment of either interest or principal is considered a default under Moody’s definitions, the rating agency added.