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Crisil, India Ratings downgrade Vodafone Idea NCDs

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Crisil was of the view that the actual payment towards the AGR-related liability could be lower than the Rs 44,150 crore that has been provided for by the company.

Two rating agencies — Crisil and India Ratings & Research — have downgraded non-convertible debentures (NCDs) of Vodafone Idea worth Rs 3,500 crore. The downgrade comes after the Supreme Court refused to grant any relief to the telecom operator, which may find it challenging to make the payment against the adjusted gross revenue (AGR) related liability. Total debt of Vodafone Idea stood at Rs 99,660 crore as on September 2019, shows the data from Bloomberg.

While Crisil has downgraded non-convertible debentures of Vodafone Idea to ‘Crisil BB’ from ‘Crisil BBB-’, India Ratings & Research downgraded long-term issuer rating of the company to ‘IND BBB-’ from ‘IND BBB’.

Crisil was of the view that the actual payment towards the AGR-related liability could be lower than the Rs 44,150 crore that has been provided for by the company. “Crisil believes there could be some relief from the Department of Telecommunications in the form of deferment of timelines for payment of these liabilities. Crisil further expects the sponsors to provide financial support in case a significant relief, in terms of amount and timelines, is provided,” it said in its rating rationale.

Post the downgrade, Franklin Templeton MF announced that it had created a segregation of portfolio in schemes that were holding debt papers of Vodafone Idea. These schemes include: Franklin India Low Duration Fund, Franklin India Dynamic Accrual Fund, Franklin India Credit Risk Fund, Franklin India Short Term Income Plan, Franklin India Ultra Short Bond Fund and Franklin India Income Opportunities Fund. Earlier the fund house had marked down its entire investment to zero in debt schemes holding the papers of Vodafone Idea. The data from Value Research shows that exposure of mutual funds to the debt papers issued by Vodafone Idea stood at Rs 3,389.77 crore till December 2019. —FE