Reliance Home Finance debunks its rating downgrading

MUMBAI: Reliance Home Finance Ltd (RHFL) has debunked the recent downgrading of its NCDs by Brickwork Ratings as completely unjustified and inappropriate.
Brickwork has revised the company’s two long-term non-convertible debentures’ (NCDs) public issue from the earlier AA to A+ and A respectively with negative implications due to revision of rating of the parent company.
“There has not been any adverse change in the company’s operational parameters from the time of the last rating action, just 8 weeks ago,” RHFL raised its objection in a statement on Monday.
The company said it considers the rating action completely unjustified and inappropriate. “There has not been any adverse change in the company’s operational parameters from the time of the last rating action, just 8 weeks ago,” it further said.
At the same time, Brickwork in its rating action rationale, explained that the rating revision has factored the deterioration in liquidity profile of the group due to challenges faced by Rcap and its key lending subsidiaries, Reliance Commercial Finance Ltd (RCFL) and Reliance Home Finance Ltd (RHFL) to raise funds through traditional bank lines and debt market instruments.
The agency added that the financial flexibility of RCFL and RHFL has moderated and it has curtailed disbursements to conserve liquidity which has impacted the growth in business.
“Further the increase in cost of funds would impact the profitability going forward. Brickwork notes that timely receipt of funds from sale or exit from the core and non-core investments and recovery of loans given by Rcap to non-financial group entities is critical to support its subsidiaries in the financial services segment,” it added.
Brickwork explained that no clarity has been provided on quantum of loans extended by RHFL to group companies, and timely recoverability of funds is critical to ensure timely repayment of debt obligations.