ICRA downgrades Fortis Healthcare, subsidiaries over loan servicing delay

 

Ratings agency ICRA has downgraded Fortis Healthcare and its subsidiaries Escorts Heart Institute and Research Centre, Fortis Hospitals and Hiranandani Healthcare, citing stretched liquidity position of the company which led to delay in servicing of a loan.

The long term rating of Fortis Healthcare Ltd (FHL) for Rs 2.5 billion non-convertible debenture programme, Rs 1.05 billion fund-based limits, and Rs 1.95 billion term loans has been revised to 'C' from BBB, ICRA said in a statement.

'C' rating reflects very high risk of default regarding timely servicing of financial obligations as against moderate degree of safety regarding timely servicing of financial obligations for 'BBB', as per ICRA.

Further, the short-term rating for Rs 6 billion commercial paper programme and Rs 200 million non-fund-based facilities have been revised from A3 (instruments carrying higher credit risk) to A4 (instruments carrying very high credit risk and are susceptible to default), ICRA said.

The ratings have been removed from watch with negative implications, it added.

Commenting on the rationale of the rating downgrade on FHL, ICRA said, "The rating action takes into account delay in servicing of a loan not rated by ICRA. The delay was on account of stretched liquidity position of the company along with its inability to roll over or refinance the loan".

FHL's ratings continue to be constrained by concerns pertaining to recoverability of advances extended to related parties, potential impact of various ongoing investigations/ litigations, deterioration in operational performance and large payments being made to Religare Health Trust (RHT), it added.

While downgrading several debt instruments of Escorts Heart Institute and Research Centre, ICRA said the rating action followed revision of ratings on rated instruments of FHL due to strong operational, financial and managerial linkage between the two entities.

Similarly, ICRA said it has downgraded ratings of debt instruments of Fortis Hospitals Ltd (FHsL) following the revision in ratings assigned to FHL.

On Hiranandani Healthcare also, ICRA cited similar reasons for the changed ratings of FHL for downgrade on its credit ratings.