Rolta Bonds Fall After Missed Payment Prompts Rating Downgrades

  • Indian software developer’s 2018 bonds drop to three-month low
  • To hold investor call Monday; 30-day grace period ends June 15

Bonds of Indian software developer Rolta India Ltd. were near their lowest level in more than three months after the company’s failure to make an interest payment prompted credit assessors to cut its ratings.

The firm’s 10.75 percent U.S. currency notes due 2018 fell to 36 cents on the dollar, poised for their lowest close since Feb. 23, Bloomberg-compiled prices show. S&P Global Ratings cut the Mumbai-based firm’s credit score on Monday following a downgrade by Fitch Ratings on Friday. The company missed a $6.8 million coupon payment due May 16. Rolta has a 30-day grace period that ends on June 15 and said last week it would hold a call with analysts and investors Monday.

“We had met them after the coupon date, but it was not mentioned to us," said Ashutosh Sharma, an analyst at S&P. “Subsequently, we tried to reach out to them, but the management was not in a position to share information as to why they missed the payment.”

Mounting bad loans at Indian lenders are hindering efforts to boost investment as Prime Minister Narendra Modi completes two years in office. Concerns about corporate governance could make it tougher for junk-rated Indian firms to access offshore bond markets.

Rating Downgrades

A person who answered the general phone line at Rolta said no one was immediately available to comment.

S&P cut its rating on Rolta five levels to CCC- and said that the company’s lack of proactive communication reflects weak management and governance. Sharma added that it was a surprise that Rolta missed the coupon payment and that information-technology companies are generally cash rich, making it rare for them to face a liquidity crunch.

Fitch cut its rating on Rolta’s bonds three steps to CC on Friday and said that the company has experienced an “uncured payment default.”

The firm’s other dollar bonds, 8.875 percent notes due in 2019, were at 29.8 cents on the dollar, having fallen from 40.2 on Thursday.

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