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Mid-cap IT services and solutions firm Rolta's shares touched a low of 5% during intra-day trading as S&P Global Rating and Fitch Ratings cut the company's credit score. The share price improved during the day and stocks were down 1.65%.
According to a Bloomberg report, the firm's 10.75% US currency notes due 2018 fell to 36 cents on the dollar, poised for their lowest close since February 23.
S&P Global Ratings on Monday lowered its long-term corporate credit rating on Rolta India to 'CCC-' from 'B+'. At the same time, the credit rating firm lowered its long-term issue rating on the senior unsecured notes that Rolta Americas and Rolta issued to 'CCC-' from 'B+'. Rolta guarantees the notes.
"We have lowered the rating on Rolta because the company missed a $6.8 million interest payment on its 10.75% 2018 unsecured notes," said S&P Global Ratings credit analyst Ashutosh Sharma. The payment was due on May 16, 2016.
He further said in his note: "We are also uncertain of the company's ability to meet its interest payment. We understand that Rolta intends to make the payment within the 30-day grace period ending on June 15, 2016. However, we do not have any information on the company's current liquidity position, which seems to have unexpectedly deteriorated."
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On Friday, Fitch Ratings too had downgraded Rolta India's Long-Term Foreign- and Local-Currency Issuer Default Ratings (IDRs) and senior unsecured class rating to 'CC' from 'B'.
Fitch has downgraded the ratings on Rolta LLC's $127 million 10.75% senior unsecured notes due 2018 and Rolta America LLC's $367 million 8.875% senior unsecured notes due 2019 to 'CC' with Recovery Rating of 'RR4' from 'B' with Recovery Rating of 'RR4'.
"The CreditWatch on Rolta reflects a one-in-two likelihood that we could lower the ratings in the next three months," said Sharma. "This reflects the uncertainty whether the company will be able to make the coupon payment on its notes within the allowed grace period."
He further said that S&P will lower the ratings to 'SD' if Rolta fails to make the payment on the bonds within the grace period. "We will lower the ratings to 'D' if Rolta misses the interest payment within the grace period and we believe the company will default on substantially or all of its obligations," he added.
Senior officials from the company, which will announce its quarter results ending March 31, 2016 today, were not available for comments.
