(Adds details from Moody's report)
MUMBAI, May 30 (Reuters) - Ratings agency Moody's Investors Service has downgraded Reliance Communications Ltd deeper into "junk" territory and kept its ratings under review for further downgrade as the company struggles with a heavy debt burden.
Moody's said it had downgraded the Indian telecom operator's "corporate family rating and senior secured bond rating to Caa1 from B2". This implies that its obligations are speculative and subject to very high credit risk, according to Moody's website.
RCom, controlled by billionaire Anil Ambani, has traditionally relied on short-term debt and covenant waivers from its banking relationships, but if these waivers are not received it could impact RCom's $300 million bondholders "significantly", Moody's said.
It also said that owing to intense mobile competition, there is no scope for RCom to deleverage.
Meanwhile, India-focused ratings agency ICRA, a subsidiary of Moody's, also downgraded four RCom debt instruments to D, which signifies instruments either in default or expected to be in default soon.
These include its non-convertible debentures (NCDs) and commercial paper programme.
Another local rating agency, Care Ratings, downgraded the company's NCDs and other debt instruments to default on Tuesday.
RCom's shares haven fallen by 41.9 percent so far this month. During the same time the broader index has gained 3.4 percent. Its shares dropped again on Tuesday, after a sharp slide a day earlier, hurt by concerns over its ability to service its loans.
RCom sought to reassure investors in its quarterly conference call on Monday, saying it was in talks with lenders to defer loan instalments coming due in the next four months.
The firm plans to repay lenders 110 billion rupees ($1.7 billion) and refinance an even larger chunk by end-September, if lenders sign off on the merger of its wireless segment with rival Aircel and sale of a majority stake in its tower unit to Canada's Brookfield. ($1 = 64.6500 Indian rupees) (Reporting by Sankalp Phartiyal and Promit Mukherjee; Editing by Euan Rocha/Edwina Gibbs/Alexander Smith)