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Reliance Capital tumbles 11% to fresh 52-week low as CARE Ratings downgrades debt programme

Credit rating agency CARE downgraded the rating of Reliance Capital to 'CARE D' for the company's long-term debt program, market-linked debentures and subordinated debt of the Company, due to the alleged "delay" in payment of interest by one day.

twitter-logo BusinessToday.In        Last Updated: September 23, 2019  | 16:23 IST
Reliance Capital tumbles 11% to fresh 52-week low as CARE Ratings downgrades debt programme
The agency attributed its action on back of the alleged "delay" in payment of interest by one day by the company.

The share price of Reliance Capital tumbled 11.32% to a fresh 52-week low of Rs 27.8 on BSE after credit rating agency CARE downgraded the rating of the firm to "CARE D" for the company's long-term debt program, market-linked debentures and subordinated debt of the company.

Reliance Capital share opened 4.14% lower at Rs 30, against the last closing price of Rs 31.35 on BSE. Later, the stock price tumbled 11.32% to the day's low of Rs 27.80 on BSE, also its new 52-week low. The highly volatile stock with the intraday volatility of 6.34% trades lower than 30, 50, 150 and 200-day moving average. Overall 41 lakh shares and 294 lakh shares were changing hands on BSE and NSE, both above the 5, 10, and 30-day average.

The agency attributed its action on back of the alleged "delay" in payment of interest by one day by the company. "This constitutes an event of default as per CARE's default recognition policy," the rating agency said in a release.

"The liquidity profile of the group continues to be under stress on account of delay in raising funds from the asset monetization plan and impending debt repayments," CARE further stated in its filing.

Reliance Capital, however, said the payments were delayed by a day due to technical glitch in bank servers. The filing submitted by Reliance Capital, quoting 'Unjustified Credit Rating action by CARE Ratings (CARE)' stated that, "The company made a stock exchange filing on September 11 stating that the interest payment for NCDs which was due on September 9 was duly activated on the due date, but the same could not go through owing to a technical glitch in bank servers on that date and the payment went through on the very next bank working day on September 11".

"These facts were also confirmed by the company's lenders who had to provide financing for the above-mentioned payments," the filing stated.

Despite the above facts, CARE downgraded the rating to 'CARE D' for the company's long-term debt program, market-linked debentures and subordinated debt of the Company, due to the alleged "delay" in payment of interest by one day.

The company filing further added that CARE arbitrarily disregarded the above confirmation provided and acted in a pre-meditated, prejudiced manner.

The share price of Reliance Capital ended 7.50% or 2.35 points lower at Rs 29 on the BSE.

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