Moody's Upgrades Vedanta Resources’ Corporate Family Rating To B3
Moody's says the Stable outlook reflects its expectation that the natural resources conglomerate will address its debt maturities
(The Corner Office Journal) -- Moody's Ratings (Moody's) upgraded the corporate family rating (CFR) of Vedanta Resources Ltd. to B3 from Caa1.
The upgrade to B3 is driven by the natural resources conglomerate’s demonstrated access to funding, reflected by the successful tap of $300 million of its 10.875% senior notes due in September 2029, Moody's said in a statement.
The tap and the company's $900 million issuance last month were oversubscribed by investors, it added.
Moody's also raised the rating on the senior unsecured bonds issued by Vedanta Resources and its subsidiary Vedanta Resources Finance II Plc to Caa1 from Caa2. The bonds are guaranteed by Vedanta Resources, the holding company of Vedanta Ltd. It maintained a Stable outlook on the ratings.
Tap Proceeds
The rating agency said the conglomerate will use the tap proceeds for the partial repayment, at par, of the company's $608 million December 2028 notes.
“We do not consider this as a distressed exchange because (1) it does not serve as a means to avoid default, given that the bond is due almost three years from now, and (2) it does not result in an economic loss for investors because the bonds are offered to be repurchased at their full value,” Moody's noted.
Next Bond Maturity
The rating agency said Vedanta Resources’ next bond maturity is a $600 million bond due in April 2026 and the company is likely to address this maturity in a timely manner, especially given its recent track record of tapping the USD bond markets.
Moody's also said the company’s recent liabilities management exercise -- which entailed debt reduction and refinancing using proceeds from the bond issuance, dividends from subsidiaries as well as stake sales in subsidiaries -- have resulted in paring its debt and easing some of its liquidity pressure.
The B3 CFR reflects Vedanta Resources’ large-scale and diversified low-cost operations, exposure to a wide range of commodities, strong position in key markets, enabling it to command a pricing premium, and history of relative margin stability through commodity cycles, according to the statement.
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