Acuite downgrades Future Retail's Rs 200 crore NCDs to BB+
Aug 15, 2020
Mumbai (Maharashtra) [India], August 15 : Acuite Ratings and Research has downgraded the long-term rating on Rs 200 crore proposed non-convertible debentures of Future Retail to BB-plus from BBB-plus.
The rating continues to remain under watch with negative implications. Further, Acuite has downgraded short-term rating to A4-plus from A2 on Rs 1,400 crore commercial paper programme of Future Retail. This rating, too, continues to remain under watch with negative implications.
Acuite said the rating actions were primarily driven by recent slippage of coupon payment on its foreign currency bonds, for which the company had availed grace period of 30 days before categorising a slippage as an event of default.
During the previous rating action, Acuite had relied on its discussions with the company's management regarding the release of limits by lender banks and other issues like induction of a strategic investor.
The strategic investment initiatives as and when they are expected to materialise could significantly alter the credit profile and perceptions of lenders or investors.
"The strategic investor is taking longer than initially envisaged and the group's interim liquidity management has been sub-optimal," said Acuite.
"The group has been facing continuing challenges in restoring operational cash flows and also in seeking a release of additional limits from its banks. In view of the major upcoming debt obligations, Acuite believes that the liquidity pressures are expected to intensify," it said.
In the event of the group not being able to arrange for timely funding to support the near term obligations, there could be an elevated possibility of the group facing more credit events.
The announcement of the deal with a strategic investor could have inspired confidence in the existing lenders, thereby facilitating the release of additional limits.
However, no significant announcements have been made by the group in this regard since the last rating action of July 30, said Acuite.
