Anil Ambani-owned Reliance Communications have finally rejected the downgrades made by rating firms and said that these rating actions do not reflect the servicing track record of the Company.
"The ratings by Moody's and Fitch apply only to these USD bonds. We respectfully disagree with the recent rating actions by both these agencies, and believe that these rating actions do not reflect the servicing track record of the Company," the company said.
RCom said the Rating Agencies have not given due credit to the advanced stage of the corporate transactions (Aircel merger and Tower sale) which are expected to deleverage the Company's balance sheet by $4 billion i.e. by 60 percent within the next few months.
The company further said that it appears that the recent positive development of the standstill period agreed by our lenders has been viewed negatively by the Rating Agencies on certain technical grounds, while in actual fact the same directly addresses their key concerns about the short-term liquidity situation.
To recall after reporting the net loss of Rs. 1,285 crore, both Moody's and Fitch have downgraded Anil Ambani-owned Reliance Communications Limited rating.
Moody's Investors Service has downgraded Reliance Communications Limited's (RCOM) corporate family rating and senior secured bond rating to Caa1 from B2. Fitch Ratings has also downgraded RCom's Long-Term Foreign- and Local-Currency Issuer Default Ratings (IDRs) to 'CCC' from 'B+'.
The agency has also downgraded the rating on RCom's $200 million 6.5percent senior secured notes due 2020 to 'CCC/RR4' from 'B+/RR4'.
"The downgrade reflects RCOM's weak operating performance, high leverage, and fragile liquidity position. The company's reported EBITDA has fallen 29 percent year-over-year, evidencing its weak market position and contracting subscriber base," Annalisa DiChiara, a Moody's Vice President, and Senior Credit Officer said in a statement