Moody's lowers Vedanta ratings

Moody's Investors Service said it downgraded Vedanta Resources Ltd.'s (VRL) corporate family rating to Caa1 from B3 and the ratings to Caa2 from Caa1 on the senior unsecured bonds issued by VRL and those issued by VRL's wholly owned subsidiary, Vedanta Resources Finance II plc, and guaranteed by VRL.

"The rating downgrades reflect the increasing refinancing risk surrounding holding company (holdco) VRL's large debt maturities. Ongoing delays in holdco VRL's refinancing efforts and its continued reliance on dividend receipts are depleting liquidity at its operating subsidiaries," said Kaustubh Chaubal, a Moody's senior vice president, in a press release.

"We previously expected holdco VRL to find sufficient funds through loans and dividends to address its debt maturities until June 2023. However, VRL faces ongoing delays in obtaining funds relative to our earlier expectations amid a funding environment that remains challenging with high interest rates, scarce market liquidity and tight credit availability," added Chaubal who is also Moody's lead analyst for VRL. "These issues expose the company to material refinancing risks and exacerbate the likelihood of a payment default or a distressed exchange."

The outlook remains negative.

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