ICRA, the Ratings agency downgraded the ratings of Fortis Healthcare and its subsidiaries Escorts Heart Institute and Research Centre, Fortis Hospitals, and Hiranandani Healthcare. ICRA suggested the stretched liquidity position leading to a delay in servicing of a loan, and thereby the downgrade.
ICRA said in a statement that the ratings have been revised from 'BBB' to 'C' for programs such as Fortis' Rs 250 crore non-convertible debentures, Rs 105 crore fund-based limits, and Rs 195 crore term loans. Analysts said that a 'C' rating reflected a very high risk of default regarding timely servicing of financial obligations as against moderate degree of safety regarding timely servicing of financial obligations for 'BBB', as per ICRA.
ICRA also placed Fortis' a short term commercial paper programme within the high risk and prone to default category. The short-term rating for Rs 600 crore commercial paper programme and Rs 20 crore non-fund-based facilities has been revised from A3 (instruments carrying higher credit risk) to A4 (instruments carrying very high credit risk and are susceptible to default), explained a note from ICRA.
Fortis' ratings remained constrained owing to concerns on recoverability of advances extended to related parties. Also, a potential impact of various ongoing investigations/ litigations, and a deterioration in operational performance and large payments being made to Religare Health Trust (RHT), resulted in the downgrade.
"The rating action takes into account delay in servicing of a loan not rated by ICRA. The delay was on account of stretched liquidity position of the company along with its inability to roll over or refinance the loan," said ICRA.
While downgrading several debt instruments of Escorts Heart Institute and Research Centre, ICRA said the rating action followed revision of ratings on rated instruments of FHL due to strong operational, financial and managerial linkage between the two entities.
ICRA has also revised the ratings of debt instruments for Fortis Hospitals Ltd, and Hiranandani Healthcare, citing similar reasons as that of Fortis Healthcare.