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S&P downgrades Future Retail's issuer credit rating
on debt recast
The rating agency might look at an upgrade after liquidity review
Global rating agency Standard & Poor's has downgraded Future Retail Ltd's long-term rating issuer credit rating
from "CCC-" to "SD", amounting to default. The rating action follows a restructuring of onshore debt.
India-based Future Retail has completed the one-time restructuring of its onshore debt (about Rs 10,200 crore)
that includes extending the maturity of its term loans and other borrowings.
The restructuring constitutes a distressed exchange. It is tantamount to default as the likelihood of a conventional
default in the absence of this transaction was high and there is inadequate offsetting compensation for lenders,
S&P said in a statement.
It expects to raise issuer credit rating on Future Retail in the coming days, most likely to the 'CCC' category, after
re-evaluating the company's liquidity position post-restructuring, the rating agency added. The review will also
focus on the viability of its capital structure.
The rating on the company's US dollar-denominated senior secured notes remains unchanged at 'CCC-' as of now
since it has been regularly servicing the semi-annual coupon on the notes.
The restructuring has been approved under the resolution framework for Covid-related stress provided by the
Reserve Bank of India.
Future Retail's liquidity position has weakened materially since March 2020, exacerbated by the strict lockdown
imposed in India to contain the spread of Coronavirus (Covid-19). The company's operating cash flows remain
depressed, given a near 70 percent decline in sales.