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Bond Market News
Vedanta Downgraded to Caa2 by Moody’s on Debt Restructuring Risks
September 27, 2023
Vedanta Resources was downgraded to Caa2 from Caa3 by Moody’s citing an “elevated risk of debt restructuring over the next few months”. This comes as Vedanta has not made significant progress to meet its near-term bond maturities, especially its dollar bonds due in January and August 2024. Vedanta’s liquidity is weak and even the management fees and dividends it receives from its operating subsidiaries are said to be inadequate to meet its debts due. Moody’s further notes that an environment of softening commodity prices could hurt the ability to generate cash flow for Vedanta’s operating subsidiaries. Moreover, any contagion risk from the holdco’s debt concerns may hurt the opcos’ fundraising ability to distribute dividends. Moody’s notes that despite Vedanta’s consolidated debt-to-EBITDA being substantially strong for the Caa category at 3.7x as of March 2023, the above factors weigh more on its financials, affecting refinancing. The rating agency maintained its negative outlook on the company.
Vedanta’s dollar bonds were trading weaker with its 13.875% bonds due January 2024 down 0.8 points to 90.41.
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