Default of Vanguard-Backed Indian Travel Planner Sends Shares to Record Low
(Bloomberg) -- A travel planner in India backed by the world’s second-largest asset manager Vanguard Group has defaulted on debt and its shares fell to a record low, as cracks in the nation’s credit market spread.
Cox and Kings Ltd. has paid only 500 million rupees ($73 million) of the two billion rupees due June 26 on unsecured commercial papers, according to an exchange filing late Thursday evening. Shares of the company dropped by their daily limit of 10% on Friday, the lowest since its trading debut in 2009.
Credit scare in India’s money markets, that started with IL&FS Group delinquency 12 months back, has worsened off late with repayment issues faced by Dewan Housing Finance Corp. and beleaguered tycoon Anil Ambani’s companies. Cox & Kings’s market capitalization has more than halved in the last two weeks following a downgrade of credit profile by Care Ratings Ltd.
Earlier this week Brickwork Ratings Ltd. cut the ratings on the company’s non-convertible debentures by one notch to AA- citing reasons including seasonal nature of tourism industry, economic slowdown and foreign exchange fluctuations. The rating of the travel company is also constrained on account of high level of pledged shares by the founders of the company and its low market capitalization, the rating company said in a June 24 note.
The Mumbai-based travel company is planning to repay its dues through a combination of internal accruals and sale of assets, it said in the filing.
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