Crisil Ratings has withdrawn the credit rating for cash-strapped airline SpiceJet, putting it under the non-cooperating category.

The agency has been rating SpiceJet’s loan facilities to the tune of ₹1,445 crore since 2018.

October 9 downgrade

“Crisil Ratings has been consistently following up with SpiceJet Limited (SpiceJet) for obtaining information through letters and e-mails apart from telephonic communication. However, the issuer has remained non-cooperative,” the rating agency said.

On October 9, Crisil had issued a rationale stating it had downgraded its rating on the ₹550-crore letter of credit facility of SpiceJet Limited (SpiceJet) to ‘Crisil D’ from ‘Crisil A4’ and the rating on the long-term bank facilities to ‘Crisil C’ from ‘Crisil B-’.

“The downgrade factors in deterioration in SpiceJet’s liquidity profile, as reflected in invocation of standby letter of credit (SBLC), which remained unpaid for more than 30 days as on June 29, 2020. SpiceJet’s liquidity deteriorated because of disruption in operations,” it had said.

Limited information

However, it had explained that the said rationale was with limited view. The reason, it said, was that “Crisil Ratings is yet to receive adequate information from SpiceJet Limited (SpiceJet) to enable it to undertake a rating review. Crisil Ratings is taking all possible efforts to get the rated entity to cooperate with its rating process to enable it to carry out the rating review”.

Crisil has been rating the company’s letter of credits to the tune of ₹500 crore, ₹50 crore and ₹220 crore. Along with this, it has also been rating ‘packing credit in foreign currency’ of ₹350 crore and term loans of ₹75 crore and ₹250 crore respectively.

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On October 29, the rating agency issued a fresh rationale, stating that “despite repeated attempts to engage with the management, Crisil Ratings failed to receive the required information which is essential for it to take a forward-looking view on the credit quality of the entity. Crisil Ratings believes the rating action on SpiceJet is consistent with ‘Assessing Information Adequacy Risk’. Crisil Ratings has migrated the ratings on the bank facilities of SpiceJet to ‘Crisil C/Crisil A4/Crisil D Issuer Not Cooperating’”.

Operating at a loss

This comes even as the company has been facing an acute cash crunch. While the company is yet to declare is Q2FY22 results, it had posted a ₹729-crore loss in the first quarter of FY22.