Rating agency Moody's said on Friday it has withdrawn its credit rating on Reliance Communications, as it considers the Indian telecom operator to be in default for missing an interest payment on its bonds that was due last week. Debt-laden Reliance Communications posted a fourth straight quarterly loss last week and said it had failed to pay interest on some debentures, sending its shares tumbling.
"Moody's has withdrawn the ratings as a missed scheduled payment of either interest or principal is considered a default under Moody's definitions," the rating agency said in a note. With net of debt of 443 billion rupees as of end-March, RCom - as the company is widely known - is the most leveraged listed Indian telecom company, and along with its rivals has been hit badly by a price war with upstart rival Reliance Jio, which is controlled by India's richest man, Mukesh Ambani.
RCom, controlled by Ambani's younger brother, Anil, is attempting to convert roughly 70 billion rupees of its debt to equity via a strategic debt restructuring plan.
As part of the plan, the company is under a debt standstill and hence there are no payments of interest or principal being made to RCom lenders or bondholders, said Moody's, adding it was thus withdrawing its 'Ca' corporate family rating on the company and its 'Ca' rating on RCom's senior secured notes. Earlier in November, RCom signed a deal to sell its non-core direct-to-home business, in a bid to reduce its debt load.
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