ICRA downgrades debt instruments of IL&FS Transportation Networks

Rating agency ICRA has downgraded a series of debt instruments of IL&FS Transportation Networks. These include non-convertible debentures (NCD), term loans, preference shares as well as commercial papers. Except for one NCD where the rating has been withdrawn, all other instruments have been downgraded to ICRA D.

The D rating is given to instruments that have either defaulted or are expected to default soon. ICRA said it has been trying to seek information from the entity to monitor its performance, but despite repeated requests, the management has remained non-cooperative. The current rating action has been taken by ICRA basis the limited information on the issuers’ performance, it said.

The IL&FS group is battling a financial crisis with a debt pile of Rs 91,000 crore. The government has stepped in to take stock of the situation and appointed an independent board at IL&FS.

In its rating rationale, ICRA said the rating reflects irregularities in debt servicing by the company and the failure to achieve any meaningful progress on equity infusion, asset monetisation and realisation of claims pending with authorities, resulting in stretched liquidity position.

The first signs of trouble in the IL&FS group emerged in June when it defaulted on inter-corporate deposits and commercial papers (borrowings) worth about Rs 450 crore. Over the next 2-3 months, three rating agencies downgraded its long-term ratings.

The National Company Law Tribunal (NCLT) has approved the takeover of IL&FS board by government nominees on October 1, citing mismanagement.