S&P Global Ratings on Wednesday downgraded Future Retail Ltd's long-term issuer credit rating from ‘CCC-’ to ‘SD’ after the company failed to repay the principal on its debt.

Future Retail failed to make the principal payments due on its restructured domestic bank borrowings on December 31, 2021. The 30-day review period (grace period to pay) allowed by the Reserve Bank of India (RBI) has ended, S&P said in a statement.

Principal repayment of about Rs 3,500 crore was due on December 31, 2021, on the company's bank borrowings as part of a one-time restructuring plan implemented by the onshore lenders in April 2021. The company was allowed a review period of 30 days to cure the default.

Future Retail failed to avoid the default amid an unsuccessful attempt to monetise its small-format stores and insufficient cash flows to meet the sizeable repayment obligation, the rating agency said. “We, therefore, lowered our long-term issuer credit rating on Future Retail to ‘'SD’.