Indian Retail Company Makes Bond Payment
Indian company Future Retail Limited successfully made a foreign bond payment before the grace period ended today.
The flagship company of one of India’s largest retailers, Future Group, informed the National and Bombay Stock Exchanges of India on 18 February that it had made a $14 million payment on its foreign currency denominated bonds. This followed their default on initial repayments due last month.
Standard & Poor’s credit rating agency rated the bonds as Selective Default (SD), after the company defaulted on loan payments. They still fulfilled bond payments within the 30-day grace period, which come as part of the terms of a restructuring agreement signed in April 2021. Future Retail is also pending a legal battle with Amazon. The latter alleged breached a shareholder contract over the proposed sale of assets to Reliance Retail to consolidate their operations, threatening the competition.
Expect that Future Retail will win its legal battle against Amazon due to lax regulations around private mergers in India. Such a victory will likely restore investor confidence in Future Retail. This may convince domestic lenders to continue allowing Future Retail to make interest payments on its bonds, even as it remains heavily indebted.
