Rolta India downgraded on missed interest payment

S&P downgraded Rolta India Ltd. to CCC- from B+ as the company missed a $6.8m interest payment on its 10.75% 2018 unsecured notes. Rolta India was the guarantor of the note.

The payment was due on 16 May 2016.

Further, ratings on the subsidiaries of the India-based IT solutions firm, Rolta Americas LLC and Rolta LLC were also downgraded to the same level as Rolta India Ltd.

As per S&P, it appears that there is uncertainty on the company’s ability to meet its interest payment within the 30-day grace period ending on 15 June 2016.

However, company CEO K.K. Singh stated that the company was confident in making the interest payment before the end of the grace period. 

The company’s receivables had increased from 120-125 days to 180-190 days, leading to a cash crunch.

A credit ratings change, in future, would hinge on the company’s ability to make the above mentioned interest payment.

Source: Business Standard

S&P lowers outlook on China; says domestic-led economic growth moving “slower than expected”

Ratings agency S&P lowered its outlook on China’s credit rating of ‘AA-‘ to negative from stable, citing the Mainland’s attempts to overhaul its economy from an investment-led and export-oriented one toward domestic-led growth was proceeding at a slower pace than expected.

The move follows that by Moody’s, which lowered its outlook on China to negative earlier in March 2016 for its credit rating of Aa3. Fitch Ratings rated China as ‘A+’ with a stable outlook.

As part of its rationale on the lower outlook on China, S&P outlined the following reasons:

  • gradual increase in economic & financial risk to the government’s creditworthiness
  • weakening of sovereign and corporate credit metrics
  • increased reliance on credit to push the sluggish economy

Source: WSJ

Anglo American to buy back $1.3bn debt

Mining firm Anglo American’s subsidiary Anglo American Capital plc plans to re-purchase upto $1.3bn of its bonds from investors as part of its turnaround plan aimed at reducing debt and divesting certain assets.

The company published a tender offer on 18 February 2016 to purchase debt which ends on 16 March 2016.

The plan to puchase debt comes on the news of Moodys’ downgrading the company’s credit ratings to Ba3 from Baa3 on 15 February 2016, ahead of its FY 2015 results announced a day later. S&P also downgraded the company’s credit rating to BB from BBB-.

Key takeaways from the FY 2015 earnings release:

  • Revenue of $23bn vs. $30.9bn a year ago
  • Net loss before tax of $5.5bn vs. loss of $259m a year ago
  • EBIT at $2.2bn vs. $4.9bn a year ago
  • EBITDA at $4.8bn vs. $7.8bn a year ago

Targets for 2016:

  • $3-4bn of asset disposals targeted
  • pro-forma net debt to decline below $10bn by 2016 and to touch $6bn in the medium-term
  • Net Leverage to be less than 2.5x in the medium-term
  • Suspension of dividend payments
  • Capex for 2016 of less than $3bn

Bonds to be purchased include EUR, GBP and USD -denominated bonds with the following maturities:

  • 4.375% bonds due December 2016
  • 1.75% bonds due November 2017
  • 1.75% bonds due May 2018
  • 6.875% bonds due April 2018
  • 2.5% bonds due September 2018
  • 2.625% USD bonds due 2017

Sources: Company Press Releases, PR Newswire, Bloomberg & FT