Shyam Telelink Limited (STL), the latest entrant in the Indian telecom space, has been assigned LAA-(SO) rating by ICRA for its Rs 4.8 billion term-loan programme. LAA- (read L double A minus) is the high-credit-quality rating assigned by ICRA and denotes that the rating instrument carries low credit risk. Shyam Telelink Limited (STL) is a joint venture between Sistema (LSE: SSA) of Russia and India’s Shyam Group.

Sergey Savachenco, CFO, Shyam Telelink Limited commented on the same, “The ICRA rating achieved is a reflection of the financial strength and stability of the company. Even in the present market scenario and economic downturn, the prospects for STL are quite good and the rating reinforces our understanding and expectation of the Indian market space.”

The letters SO in parenthesis suffixed to the rating symbol stands for Structured Obligation. An SO rating is specific to the rated issue, its terms, and its structure. The (SO) ratings do not represent ICRA’s opinion on the general credit quality of the issuers. 

The rating is a credit enhanced by an unconditional and irrevocable stand-by letter of credit (SBLC) issued by ABN Amro Bank N.V. The LAA-(SO) rating addresses the servicing of the term loan to happen as per the terms of the underlying loan and the SBLC arrangement. Also, the rating assumes that the SBLC will be duly invoked, as per the terms of the underlying loan and SBLC agreements, in case there is a default in payment by the borrower.

The credit quality of STL emanates from its strong parentage in Sistema (LSE: SSA) which owns 73.71% in STL. Apart from providing management and technical support, Sistema (LSE:SSA) has also largely guaranteed all the debt obligations of STL. STL has already obtained UASL licence for pan-India telecom services.

Sourced From: LINOpinion - The Lintas Public Relations Division