Fitch Ratings has downgraded Reliance Communications owned (RCOM) Global Cloud Exchange (GCX) Limited’s long term foreign and local currency issuer default ratings (IDRs) to CC from CCC.

In addition, Fitch has also downgraded GCX’s rating on USD350 million 7 per cent secured notes due in 2019 from B- to CCC, with a recovery rating of RR2 due high levels of credit risk regarding refinancing of the secured notes.

The risk can be attributed to GCX’s poor access to capital markets and legal and other procedural delays in RCOM's exit from the strategic debt restructuring (SDR) process in India. The notes, issued by GCX are rated two notches higher than GCX's IDR due to the positive outlook of recoveries on senior secured notes in a default scenario.

According to Fitch, RCOM's ability to sell its 100 per cent stake in GCX is uncertain as it may require the operator to exit from the SDR process successfully. Further, GCX will lose about USD15 million-20 million in working capital, due to non-payment of revenue billed to RCOM.