Vedanta Resources faces ratings downgrade S&P Global Ratings amid debt default concerns

S&P Global Ratings has announced a ratings downgrade for Vedanta Resources, the parent company of Vedanta Ltd, citing apprehensions over the extension of maturities for certain bonds, reported news agency Reuters.

The move comes as Vedanta Resources recently secured $1.25 billion from financial institutions for refinancing, which includes a new credit facility.

The company also said it has initiated consent solicitations with current bondholders to prolong the debt maturity profile. This initiative, as per the company, aims to extend maturities and make adjustments to bond terms, and pursue specific waivers.

Concerns about default

S&P Global expressed concerns about the “likelihood of a conventional default,” pointing to the company’s substantial upcoming debt maturities and compromised access to both internal cash flow and external financing.

It may be noted that Vedanta Resources is reported to have approximately $4.5 billion in debt maturities through March 2025, prompting the rating agency to downgrade the company’s rating from “CCC” to “CC.”

The downgrade is part of a series of rating adjustments for Vedanta Resources, with agencies expressing worries about the conglomerate’s $6.4 billion outstanding debt.

S&P had previously downgraded Vedanta Resources to “CCC” from “B-” in late September, closely following Moody’s Investors Service’s downgrade of the miner’s unsecured bonds and corporate family rating.

Anil Agarwal, Vedanta’s founder and chairman, has actively pursued strategies to alleviate the group’s debt burden. However, various attempts, including an unsuccessful bid to take the company private in 2020 and a contested deal with the Indian government for Hindustan Zinc to acquire some of Vedanta’s zinc assets, have faced challenges.

In September, Vedanta embarked on a significant corporate restructuring, dividing the conglomerate into six separate businesses.