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(Bloomberg) -- Fitch cut the ratings on Reliance Communications unit Global Cloud Xchange on concern the undersea cable company is facing liquidity and refinancing risks, according to a statement Thursday.

• Fitch cut Global Cloud Xchange to B- with a negative outlook
• It also lowered unit GCX Ltd.’s $350m 7% 2019 senior unsecured notes by 3 steps to B+, with an indicated recovery level of 71-90% in a default scenario
• Fitch cites risks of persistently negative free cash flow, deteriorating liquidity, and therefore higher refinancing risk of the bond due in August 2019: statement
• Downgrades reflect expectations that liquidity may weaken in FY18
  • Group cash balance may fall below $40m due to “lower indefeasible right of usage sales, weakness at its managed service segment and working capital outflows”
  • Fitch estimates measure of adjusted net leverage to deteriorate to more than 5x in FY18 vs 4.2x in FY17
• GCX’s 7% notes due 2019 were little changed at about 91.9 cents on the dollar at 3.15pm in Hong Kong, according to Bloomberg-compiled prices
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To contact the reporters on this story: David Yong in Singapore at dyong@bloomberg.net; Anurag Joshi in Mumbai at ajoshi53@bloomberg.net To contact the editors responsible for this story: Neha D'silva at ndsilva1@bloomberg.net David Yong, Finbarr Flynn