Future Retail Completes Onshore Restructuring; S&P Downgrades Issuer Level Rating

Future Retail announced the implementation of a one-time restructuring plan by its onshore lenders on debt of ~INR 102bn ($1.4bn). The restructuring was approved under the resolution framework for COVID-related stress provided by the RBI and involves extending their term loan and NCDs by 18-24 months. Further, amounts due on its working capital borrowings, including interest will also be “converted into working capital term loans and funded interest term loans to be repaid from December 2021”, said S&P. The rating agency downgraded Future Retail’s issuer rating to SD while maintaining the issue ratings on its dollar bonds at CCC- stating that the “restructuring constitutes a distressed exchange and is tantamount to a default”. The issue level ratings were maintained since they have been regularly servicing the semi-annual coupons on their notes. S&P added that they will reevaluate their issuer level ratings post the restructuring and are likely to raise it to CCC.

Future Retail’s USD 5.6% 2025s were unchanged at 80.62, yielding 12.2%.

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