Closing switch from RCOM 2020s (65 offer) into GCX 2019s (91.5 bid)    We had recommended the switch in our note on June 30. The gap betweentwo bonds is almost 30 points now and at its highest ever (Figure 1). Webelieve it will be hard for GCX to keep outperforming on a material basis,especially if RCOM heads further down. We acknowledge that GCX bonds aresecured and the recovery will be quite high, but it could eventually beimpacted by the contagion from parent. Plus, as highlighted in our report onJune 14, we don't assign a high likelihood to GCX being sold to a strongertelco in the near term. Fitch has also lowered the bond rating from BB+ to B+,estimating recovery at 71-90%. Downgrading the 2019s from Buy to Hold. Keyupside risks are successful strategic sale, 100% recovery, etc., while downsiderisks are deterioration in underlying operations, depletion of cash balance, anddividend / loan payment to RCOM.    Keeping outright Sell on RCOM 2020s (62 bid)    Our core thesis here hasn't changed. Road blocks to the Aircel deal remain.Trade creditors continue to oppose it. Even the lender approval is preliminarywith their final approval required before closing. Moreover, the DoT has nowobjected, linking its approval to the ongoing Supreme Court case on Aircel'sshareholders. RCOM is running against time as we know with the lenderstandstill expiring in December. Even if the Aircel deal goes through, as wehave argued before, it doesn't help the bondholders sitting at the holdco. Welast estimated recovery at 42-70% on June 1 and haven't seen anything sinceto change this significantly. Separately, RCOM should report results in thecoming weeks and the numbers obviously won't look any better. From a sectorperspective, we see the next leg of competition coming in September onceRjio launches its own feature phone. Though there have been talks about somegovernment help for the sector in the form of further deferral of spectrumpayments, it won't be material for RCOM. Key upside risks are sponsorsupport, asset sales at higher than our expectations, etc.

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