Credit rating agency, Icra, today reduced Reliance Communications' long-term rating to LAA from LAA plus for its Rs 28,116 crore long-term debt and its Rs 5,000 crore non-convertible debenture programme.
"The long term rating continues to remain under watch with negative implications," Icra said in a press release.
RCom's net debt has been around Rs 32,048 crore, which is 3.5 times its earning before interests, taxes depreciation and amortisation. The company has been trying to reduce its debt, since last year by selling 26 per cent stake in the company, and its tower business. These deals, however, could not go through.
Icra also said the rating action takes into consideration the delay in the proposed equity infusion and continuing regulatory uncertainties, which in Icras opinion, may impact the company's ability to de-leverage its balance sheet.
Today, Icra also downgraded RCom's tower subsidiary Reliance Infratel's outlook on credit rating to LAA from LAA+ assigned to the Rs 1,000 crore long term debt.
While placing the long-term rating of the company on watch, with negative implications in March, ICRA had noted the key rating sensitivities are the proposed equity raising plans, reduction in debt levels and improvement in its operating profitability leading to improvements in its credit metrics.
The agency said that while the debt levels of the company continue to remain high, the repayment obligation in the short term has eased considerably with the company availing of a long-term facility aggregating to $1.9 billion from the China Development Bank, which includes $1.33 billion for refinancing short-term loans falling due.
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"This has resulted in a favourable change in the maturity profile of the debt outstanding. While the company is making concerted efforts to infuse equity in order to improve its capital structure, its ability to do so continues to remain the key rating sensitivity," the agency said.
Today, ICRA also downgraded RCom's tower subsidiary Reliance Infratel's outlook on credit rating to LAA from LAA+ assigned to the Rs 1,000 crore long term debt.