Fitch downgrades Unitech's Long-term rating to " BBB(ind) "

By Abhishek on 11:45 PM

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Fitch Ratings on Tuesday downgraded realty major Unitech Limited's (Unitech) Long-term rating to 'BBB(ind)' from 'A-(ind)' (A minus) an maintains its ngative long-term rating outlook.

The downgrade reflects the ongoing delay in the completion of asset sales, and its impact on Unitech's ability to service its short-term debt obligation, according to a release by the company.

Fitch on 11 November 2008 had said that it expected the asset sales to be completed by December 2008, and noted that the unsuccessful completion of the projected asset sales would trigger a ratings downgrade.

The Negative Outlook reflects Unitech's reduced liquidity position, as the company is facing significant maturities during the next six months (principal amount around INR27bn) and the ensuing substantial refinancing risk. The liquidity risks are accentuated by the tightness of the credit environment.

The Outlook also reflects potential further negative pressure on cash flow generation and credit metrics, stemming from a more adverse real estate sector environment than previously envisaged.

Following this rating action, Fitch also downgraded single certain structured products loan sell down transactions where the ratings of the pass through certificates (PTCs). The downgrade of the PTCs follows the downgrade of Unitech Limited's National Long-term and Short-term ratings to 'BBB(ind)' from 'A-(ind)' (A minus(ind)) and to 'F3(ind)' from 'F2+(ind)', respectively.

Source : EconomicsTimes

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