Standard & Poor’s (S&P) has lowered the rating on Future Retail Ltd’s (FRL) $500 million bonds from CCC- to CC, which implies the bonds are ‘highly vulnerable’.

This comes after Reliance Industries Ltd (RIL) called off the mega deal to acquire various assets of the Future group last week.

“We lowered the rating on Future Retail’s $500 million senior secured notes because we view default as a virtual certainty. The termination of the proposed sale of assets to Reliance Retail Ventures Ltd (RRVL) has magnified the risk of a default on the next coupon payment on the rated notes, and of the initiation of bankruptcy proceedings against the company,’’ the global rating agency said.

S&P added that the risk of FRL missing the next coupon on the notes due on July 22 has increased significantly. It pointed out that Future Retail’s liquidity position remains weak.