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Informist, Friday, Dec. 20, 2024

MUMBAI – S&P Global Ratings Friday upgraded its issuer credit rating on Vedanta Resources Ltd. to 'B' from 'B-' and raised its rating on the company's guaranteed bonds to 'B-' from 'CCC+'. It has a 'stable' outlook on the company. This comes after the company obtained approval from bondholders to remove the springing maturity clause for its bonds due in 2028, which would have led to early payments to bondholders.

"We had previously considered the acceleration of maturities in the event of failure to refinance the US$600 million bond due in April 2026 by December 2025 as a key risk," the agency said. However, with the bondholders voting in favour to remove the clause of springing maturity, the ratings agency does not see this as a risk. Further, they were also positive after the company in November raised $800 million through bonds. Following this, debt headroom for Vedanta Resources' holding company, Twin Star Holdings, will increase by more than $1 billion, giving it flexibility to raise funds to address the $1.15 billion April 2026 maturities. 

Considering the recent developments, the ratings agency expects Vedanta Resources' refinancing risks to be more manageable. The ratings agency also assigned 'B-' long-term issuer rating to the senior unsecured notes that the company's subsidiary Vedanta Resources Finance II PLC had issued.

The recent $800 million capital raising, along with $1.2 billion of bonds issued in September, support the ratings agency's view that the company's access to capital markets has been improving since the restructuring. The ratings agency has also factored in the smaller volume of upcoming debt maturities for the company. The stable outlook reflects the company's good underlying operations, which should support internal cash generation and refinancing efforts. 

Highlighting risk, the agency said Vedanta Resources' rating could be downgraded if refinancing risks increase or earnings of its subsidiary Vedanta Ltd. deteriorate. Further, if the company does not make progress on refinancing the April 2026 debt maturities within 12 months of maturity, it could signal higher refinancing and liquidity risk, S&P said.  End

US$1 = INR 85.01

Reported by Steffy Maria Paul

Edited by Deepshikha Bhardwaj

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