Thread by @TheWealthVed

Finally rating agencies sprung into action on Future Group.

Reflecting upon the high debt levels of the Future Group, ICRA has downgraded the rating of its investment holding company (Future Corporate Resources Private Limited) by ONE notch below investment grade. (1/n)

#Future

The rating was already BBB (Negative), now stands at BB+ (Stable). 

In July 2019, CARE also changed the outlook to “Negative” and then put it “Under Credit watch with Negative Implications”.

This was inevitable - why?

#Debt #Rating #Junk

(2/n)

The firm forayed into telecom, media and fabric business on the basis huge debt and Weakened performance of operating businesses since FY2018.

Due to insufficient cash flows from its operations, FCRPL’s debt servicing is solely dependent on its ability to monetise its investments and / or timely refinance its debt.

Continuous weakness in financial flexibility due to too much pledged shares, huge debt pile and stretched liquidity position 

The first time when all these instruments were rated by ICRA, it assigned [ICRA]BBB (Stable) rating, barely touching the investment grade criteria.

Good Part is the firm has the power to monetise its investment in a lot of unlisted entities of Future Group - so the probability of a “Fall” is still far away.

Looks like none of the MFs had exposure to the MLDs and Long Term Bonds of the group.

@threadreaderapp unroll please!