Fitch Maintains Rating Watch Negative on Cairn India Holdings; Withdraws Ratings

  • Reuters
  • Commodities News
Fitch Maintains Rating Watch Negative on Cairn India Holdings; Withdraws Ratings
Credit: © Reuters.

(The following statement was released by the rating agency) Fitch Ratings-Singapore-16 September 2020: Fitch Ratings has maintained Cairn India (NS: CAIL ) Holdings Limited (CIHL) Long-Term Issuer Default Rating of 'B+' on Rating Watch Negative (RWN). Fitch has also simultaneously withdrawn the ratings. The agency will no longer provide ratings or analytical coverage of this issuer. Fitch placed CIHL's rating on RWN on 10 June 2020 after Vedanta Resources Limited (VRL) said it planned to delist the shares of its Indian subsidiary and CIHL's parent, Vedanta Limited (VLTD). CIHL's rating is aligned with the credit profile of VLTD, reflecting their strong linkages and VLTD's 100% ownership of CIHL The ratings were withdrawn with the following reason: For Commercial Purposes Key Rating Drivers Weaker Profile Under Delisting Plan: The RWN reflects the risk that should the delisting succeed, Fitch would assess the linkage between VRL and VLTD as 'Strong', rather than 'Moderate', and the agency will view the group as a single economic block, as VRL will own 100% of VLTD, which will hold 100% of CIHL. This will result in Fitch assessing the VLTD's credit profile based on the consolidated VRL group, which we believe is weaker. The rating is maintained on RWN as the delisting has not been completed. The company is in process of getting the relevant regulatory approvals and plans to launch the reverse book building process after that. For details on the key rating drivers see "Fitch Places Cairn India Holdings on Rating Watch Negative on Delisting Plan", published 10 June 2020 at CIHL has an ESG Relevance Score of 4 for Governance Structure, which reflects issues related to overall board structure and composition, and effective management control. Our assessment does not factor in any cash leakage from VLTD or CIHL, aside from the dividends to VRL. CIHL invested in a structured product originated by VRL's shareholder Volcan Investment Limited in January 2019, and it was subsequently unwound profitably in August 2019. Various investors at the group voiced opposition to the transaction and VRL has since committed to abstain from similar transactions in the future. However, Fitch believes that absence of large and vocal minority investors at VLTD after the delisting might make it easier for Volcan to access the cash at the operating companies for its liquidity needs. RATING SENSITIVITIES No longer applicable as the ratings have been withdrawn. Best/Worst Case Rating Scenario International scale credit ratings of Non-Financial Corporate issuers have a best-case rating upgrade scenario (defined as the 99th percentile of rating transitions, measured in a positive direction) of three notches over a three-year rating horizon; and a worst-case rating downgrade scenario (defined as the 99th percentile of rating transitions, measured in a negative direction) of four notches over three years. The complete span of best- and worst-case scenario credit ratings for all rating categories ranges from 'AAA' to 'D'. Best- and worst-case scenario credit ratings are based on historical performance. For more information about the methodology used to determine sector-specific best- and worst-case scenario credit ratings, visit Criteria Variation Fitch applied its Parent and Subsidiary Rating Linkage criteria to derive the credit profile of VLTD. In case of an assessment of 'Strong' or 'Moderate' linkages between a weaker parent (VRL) and stronger subsidiary (VLTD), the criteria establish that the Issuer Default Ratings for both are likely to be based on the consolidated credit profile. However, the committee assessed VLTD's credit profile as better than the consolidated group profile. REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF RATING The principal sources of information used in the analysis are described in the Applicable Criteria. ESG Considerations CIHL has an ESG Relevance Score of 4 for Governance Structure, which reflects issues related to overall board structure and composition, and effective management control. These have a negative impact on the rating. Except for the matters discussed above, the highest level of ESG credit relevance, if present, is a score of 3 - ESG issues are credit neutral or have only a minimal credit impact on the entity(ies), either due to their nature or the way in which they are being managed by the entity(ies). For more information on Fitch's ESG Relevance Scores, visit Cairn India Holdings Limited; Long Term Issuer Default Rating; Rating Watch Maintained; B+; RW: Neg ; Long Term Issuer Default Rating; Withdrawn; WD Contacts: Primary Rating Analyst Shubha Sethi, CFA Associate Director +65 6796 7245 Fitch Ratings Singapore Pte Ltd. One Raffles Quay #22-11, South Tower Singapore 048583 Secondary Rating Analyst Mohit Soni, Associate Director +91 22 4035 6163 Committee Chairperson Vicky Melbourne, Senior Director +61 2 8256 0325 Media Relations: Leslie Tan, Singapore, Tel: +65 6796 7234, Email: Additional information is available on Applicable Criteria Corporate Rating Criteria (pub. 01 May 2020) (including rating assumption sensitivity) ( Parent and Subsidiary Linkage Rating Criteria (pub. 26 Aug 2020) ( Sector Navigators - Addendum to the Corporate Rating Criteria (pub. 26 Jun 2020) ( Applicable Model Numbers in parentheses accompanying applicable model(s) contain hyperlinks to criteria providing description of model(s). Corporate Monitoring & Forecasting Model (COMFORT Model), v7.9.0 (1 ( Additional Disclosures Solicitation Status ( Endorsement Status ( Endorsement Policy ( ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTPS://WWW.FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS (HTTPS://WWW.FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS). IN ADDITION, THE FOLLOWING HTTPS://WWW.FITCHRATINGS.COM/RATING-DEFINITIONS-DOCUMENT ( DETAILS FITCH'S RATING DEFINITIONS FOR EACH RATING SCALE AND RATING CATEGORIES, INCLUDING DEFINITIONS RELATING TO DEFAULT. PUBLISHED RATINGS, CRITERIA, AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE, AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE CODE OF CONDUCT SECTION OF THIS SITE. DIRECTORS AND SHAREHOLDERS RELEVANT INTERESTS ARE AVAILABLE AT HTTPS://WWW.FITCHRATINGS.COM/SITE/REGULATORY ( FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH RATINGS WEBSITE. Copyright © 2020 by Fitch Ratings, Inc., Fitch Ratings Ltd. and its subsidiaries. 33 Whitehall Street, NY, NY 10004. Telephone: 1-800-753-4824, (212) 908-0500. Fax: (212) 480-4435. Reproduction or retransmission in whole or in part is prohibited except by permission. All rights reserved. In issuing and maintaining its ratings and in making other reports (including forecast information), Fitch relies on factual information it receives from issuers and underwriters and from other sources Fitch believes to be credible. Fitch conducts a reasonable investigation of the factual information relied upon by it in accordance with its ratings methodology, and obtains reasonable verification of that information from independent sources, to the extent such sources are available for a given security or in a given jurisdiction. The manner of Fitch's factual investigation and the scope of the third-party verification it obtains will vary depending on the nature of the rated security and its issuer, the requirements and practices in the jurisdiction in which the rated security is offered and sold and/or the issuer is located, the availability and nature of relevant public information, access to the management of the issuer and its advisers, the availability of pre-existing third-party verifications such as audit reports, agreed-upon procedures letters, appraisals, actuarial reports, engineering reports, legal opinions and other reports provided by third parties, the availability of independent and competent third- party verification sources with respect to the particular security or in the particular jurisdiction of the issuer, and a variety of other factors. Users of Fitch's ratings and reports should understand that neither an enhanced factual investigation nor any third-party verification can ensure that all of the information Fitch relies on in connection with a rating or a report will be accurate and complete. Ultimately, the issuer and its advisers are responsible for the accuracy of the information they provide to Fitch and to the market in offering documents and other reports. In issuing its ratings and its reports, Fitch must rely on the work of experts, including independent auditors with respect to financial statements and attorneys with respect to legal and tax matters. Further, ratings and forecasts of financial and other information are inherently forward-looking and embody assumptions and predictions about future events that by their nature cannot be verified as facts. As a result, despite any verification of current facts, ratings and forecasts can be affected by future events or conditions that were not anticipated at the time a rating or forecast was issued or affirmed. The information in this report is provided "as is" without any representation or warranty of any kind, and Fitch does not represent or warrant that the report or any of its contents will meet any of the requirements of a recipient of the report. A Fitch rating is an opinion as to the creditworthiness of a security. This opinion and reports made by Fitch are based on established criteria and methodologies that Fitch is continuously evaluating and updating. Therefore, ratings and reports are the collective work product of Fitch and no individual, or group of individuals, is solely responsible for a rating or a report. The rating does not address the risk of loss due to risks other than credit risk, unless such risk is specifically mentioned. Fitch is not engaged in the offer or sale of any security. All Fitch reports have shared authorship. Individuals identified in a Fitch report were involved in, but are not solely responsible for, the opinions stated therein. The individuals are named for contact purposes only. A report providing a Fitch rating is neither a prospectus nor a substitute for the information assembled, verified and presented to investors by the issuer and its agents in connection with the sale of the securities. Ratings may be changed or withdrawn at any time for any reason in the sole discretion of Fitch. Fitch does not provide investment advice of any sort. Ratings are not a recommendation to buy, sell, or hold any security. Ratings do not comment on the adequacy of market price, the suitability of any security for a particular investor, or the tax-exempt nature or taxability of payments made in respect to any security. Fitch receives fees from issuers, insurers, guarantors, other obligors, and underwriters for rating securities. Such fees generally vary from US$1,000 to US$750,000 (or the applicable currency equivalent) per issue. In certain cases, Fitch will rate all or a number of issues issued by a particular issuer, or insured or guaranteed by a particular insurer or guarantor, for a single annual fee. Such fees are expected to vary from US$10,000 to US$1,500,000 (or the applicable currency equivalent). The assignment, publication, or dissemination of a rating by Fitch shall not constitute a consent by Fitch to use its name as an expert in connection with any registration statement filed under the United States securities laws, the Financial Services and Markets Act of 2000 of the United Kingdom, or the securities laws of any particular jurisdiction. Due to the relative efficiency of electronic publishing and distribution, Fitch research may be available to electronic subscribers up to three days earlier than to print subscribers. For Australia, New Zealand, Taiwan and South Korea only: Fitch Australia Pty Ltd holds an Australian financial services license (AFS license no. 337123) which authorizes it to provide credit ratings to wholesale clients only. Credit ratings information published by Fitch is not intended to be used by persons who are retail clients within the meaning of the Corporations Act 2001 Fitch Ratings, Inc. is registered with the U.S. Securities and Exchange Commission as a Nationally Recognized Statistical Rating Organization (the "NRSRO"). While certain of the NRSRO's credit rating subsidiaries are listed on Item 3 of Form NRSRO and as such are authorized to issue credit ratings on behalf of the NRSRO (see, other credit rating subsidiaries are not listed on Form NRSRO (the "non-NRSROs") and therefore credit ratings issued by those subsidiaries are not issued on behalf of the NRSRO. However, non-NRSRO personnel may participate in determining credit ratings issued by or on behalf of the NRSRO.

Drop an image here or Supported formats: *.jpg, *.png, *.gif up to 5mb

Error: File type not supported

Drop an image here or


Related Articles