S&P downgrades Rolta credit rating to default

Credit analyst says company failed to pay $6.8 mn interest due on its 2018 senior unsecured guaranteed notes even after 30-day expiry period

Mid-cap technology solutions and services company Rolta's rating was further downgraded by global rating firm. S&P Global Ratings said today that it had lowered its long-term corporate credit rating on Rolta India to 'D' (default) from 'SD' (selective default).

"We also lowered our long-term issue rating on the 2018 senior unsecured notes issued by Rolta, LLC to 'D' from 'CC'. Our 'CC' issue rating on the 2019 senior unsecured notes issued by Rolta Americas LLC remains on CreditWatch with negative implications.

Both sets of notes are guaranteed by Rolta, an India-based information technology products and solutions provider," said a noted from the rating agency.

"We downgraded Rolta because the company failed to pay the $6.8 million interest due on its 2018 senior unsecured guaranteed notes, even after the expiry of the 30-day grace period," said S&P Global Ratings credit analyst Ashutosh Sharma. The management had expected the trustee to make the coupon payments from its interest reserve account, but that hasn't happened yet.

Rolta's $35 million bank loans due since March 31, 2016, also remain unpaid. "We believe a default on Rolta's 2019 senior unsecured guaranteed notes is almost certain because the company has not shared any detailed plan for repayment with us," said Sharma. The Rolta management has said that it is currently working on addressing the overall situation in consultation with its bankers and strategic advisors.

The CreditWatch on the 2019 guaranteed notes reflects that these notes are highly vulnerable to a default. We will lower our rating on these notes to 'D' if Rolta fails to pay its coupon as it comes due. "We will resolve the CreditWatch if Rolta makes the necessary payments on all its debts and provides a credible plan to meet its debt obligations over the next six months," said the note from S&P.