RCap's $5-bn debt at risk on default rating, revives India's credit scare

The default rating is set to exacerbate a yearlong credit crunch among India's shadow lenders, which started with the collapse of IL&FS Group last year

Reliance Capital Ltd.’s downgrade to default grade at Care Ratings Ltd. places the debt of embattled tycoon Anil Ambani’s conglomerate at risk, reigniting India’s credit scare.

Mumbai-based Care cut Reliance Capital’s bonds by eight notches to D from BB, citing a delay in coupon payments on several of the lender’s non-convertible debentures, the rating company said in a Sept. 20 statement. Reliance Capital group’s debt stood at about $5 billion as of September, according to a company’s spokesman.

The delay in coupon payments was caused by a “technical glitch in bank servers,” Reliance Capital said Saturday in an exchange filing, adding that