PremiumMumbai: S&P Global Ratings on Monday assigned 'A-' long-term issue rating to the proposed US dollar-denominated senior unsecured notes issued by Wipro IT Services LLC.
Wipro IT Services is a US-based wholly owned step-down subsidiary of Wipro Ltd, which guarantees up to 105% of the principal payment on the notes. The company will use the proceeds to repay its debt as well as for general corporate purposes.
According to the rating agency, Wipro IT Services is a strategic and integral part of India-based Wipro Ltd, and has been used as a vehicle to pursue acquisitions, including The Capital Markets Co. (UK) Ltd., its largest to date and are in line with Wipro Ltd.'s growth strategy and will help to increase its presence in digital offerings and therefore it will continue to play an important role in Wipro Ltd.'s growth strategy.
"Wipro IT Services as highly integrated with Wipro Ltd., given their common management, shared name, branding, and treasury operations and expect Wipro IT Services to receive strong financial support from Wipro Ltd., if required" said S&P.
While the rating on the notes is not derived directly from the guarantee, the guarantee is a strong signal of support. Wipro IT Services has also received funds via shareholder loans from Wipro Ltd. in the past $45 million outstanding as of March 2020, it added.
"S&P said equalize the rating on the proposed notes with our issuer credit rating on Wipro Ltd. The rating on Wipro reflects the company's large revenue base, good market position, low debt, and strong net cash position limits subordination risk, on Wipro's strong financial position and insignificant secured debt."
The rating agency said Wipro will maintain its good competitive position and profitability, and a net cash position over the next 24 months.
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