Moody's Investors Service today said the cancellation of the merger agreement with Aircel has no impact on Reliance Communications' current credit rating and the outlook remains negative for the company.
Moody's had downgraded the credit rating of RCom to 'Ca' from 'Caa1' in June 2017.
"Reliance Communications Limited's (Rcom's) cancellation of the merger agreement of its mobile business with Aircel Limited has no impact on Rcom's Ca corporate family and senior secured bond ratings. The ratings outlook remains negative," Moody's said in a statement.
Credit rating indicates the capability of a company to pay back debt.
'Ca' rating indicates that obligations in this category are highly speculative and are likely in, or very near, default, with some prospect of recovery of principal and interest.
Moody's rates firms in nine categories ranging from Aaa to C.
Reliance Communications, which is reeling under a debt burden of about Rs 46,000 crore, has called off merger talks with Aircel, citing "legal and regulatory" delays.
RCom and Aircel had signed binding agreements in September 2016 for the merger of mobile business.
"This transaction was crucial to RCom's delevering plans.
Absent this transaction, the company's debt levels will remain high and its expected debt restructuring and corporate reorganization will be further delayed," Moody's Vice President and Senior Credit Officer, Annalisa DiChiara said.
Moody's said that the rating outlook is negative, reflecting the ongoing uncertainty regarding the company's cash flow-generation capabilities, debt restructuring progress, and the recovery prospects for both lenders and bondholders.
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