Rolta’s Bonds Slump Most in Two Weeks as Grace Period Nears End

  • Grace period for 10.75 percent dollar bonds ends on June 15
  • Scrutiny of small, high-yield issuers may mount, Fitch says

Rolta India Ltd.’s bonds fell the most in two weeks Tuesday ahead of the end of a grace period for it to make a $6.8 million coupon payment.

The Indian software company must make the payment by Wednesday on the 10.75 percent notes that mature in 2018, after failing to honor the obligation by an original May 16 deadline. The notes fell 1.4 cents to 16.5 cents on the dollar while the firm’s 8.875 percent securities due 2019 declined 2 cents to 13, the biggest drop since May 31, Bloomberg-compiled data show.

Any nonpayment could hurt investor sentiment toward Indian offshore high-yield bonds and test the country’s new bankruptcy laws. India’s borrowers, which have defaulted on more than $3.3 billion of foreign-currency debt since 2003, face about $41 billion in maturities through the end of 2020, data compiled by Bloomberg show.

"People will start looking at some of these smaller high-yield companies with skepticism," said Nitin Soni, the primary analyst in Singapore at Fitch Ratings, adding that Rolta has not been responding to questions on its liquidity situation.

Ramakrishna Prabhu, Rolta’s chief financial officer, didn’t immediately reply to an e-mail seeking comment. A person who answered a call to the firm’s Mumbai office, when asked for someone who could comment on the matter, transferred the call to another line that went unanswered.

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