Anil Ambani-owned Reliance Communications did not inform credit rating agencies about missing a non-convertible debenture instalment of ₹375 crore that was due on February 7, a senior executive in the credit rating community, who did not wish to be named, told BusinessLine .

RCom eventually did make the payment, on April 10, but rating agencies said the delayed payment came to light only when the company announced its March quarter results on May 27.

“Companies, in general, are supposed to disclose missed debt payments to rating agencies, as part of the agreement,” the executive quoted above said. “In RCom’s case, even the debenture trustee was not aware of the delayed payment.”

For a rating agency, a delayed payment counts as default. On May 30, the two domestic rating agencies with outstanding ratings on RCom — CARE and ICRA — downgraded the company’s outstanding debt to default status.

Rating experts at the two agencies say they followed due process, pending a reported inquiry by securities market watchdog SEBI into their handling of the RCom issue. ICRA placed RCom under ratings watch, moving the ₹5,000-crore NCD programme from BBB+ status in September 2016 to three downgrades — to BBB, BB and D — through May. Through May, CARE revised its ratings on the NCD issue from A- to BB to the final D.

Hetal Dalal, COO of shareholder advisory firm Institutional Investor Advisory Services, said the rating agencies could have been more watchful: “With Reliance Communications, the credit rating agencies had changed the rating on the outstanding instruments from investment grade to speculative grade; that was multiple-notch downgrades in quick successions. The monitoring exercise should have told them that there has been a deterioration in credit quality and there should have been a more staggered and systematic downgrade. A direct change from investment to speculative grade means you’ve suddenly woken up to the fact that the credit quality has deteriorated sharply.”

Another ratings expert told BusinessLine , on the condition of anonymity, that RCom had been constantly under ratings watch, for the past few months.

“But the company has always been able to refinance its debt till now. Nobody expected the default to happen in February; we only learnt of it later. Rating agencies also depend on private communications with lenders, mutual funds, other market information. But we can’t take a rating action till there is clear communication of a default.”

Sources close to Reliance Communications have said the company has complied with the ratings agreement and is constantly engaged with all partners and agencies.

“The company has complied with all disclosure requirements, so it is incorrect to say that there was any delay in informing stakeholders about the default,” said a source close to the company.

On Friday, RCom got a breather after lenders agreed to give Ambani time till December to repay debt of nearly ₹45,000 crore. The company assured the lenders that it will move swiftly on the tower asset sale and merger with Aircel.

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