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Moody’s downgrades Vedanta after debt restructuring gets creditors’ acceptance

Moody’s has maintained the negative rating outlook on the company, the rating agency said on Tuesday.

vedanta 300NEW DELHI: A week after Vedanta creditors overwhelmingly voted in favour of its debt restructuring plans, Moody’s Investors Service downgraded the corporate family rating of Vedanta Resources Limited (VRL) to Caa3 from Caa2. It also downgraded its rating on the senior unsecured bonds issued by VRL to Ca from Caa3.

Moody’s has maintained the negative rating outlook on the company, the rating agency said on Tuesday. Last week, bond holders of Vedanta Resources gave a go ahead to the group’s proposal to restructure debts raised through four series of bonds.

The bond holders overwhelmingly voted in favour of the proposal with 97% vote shares. These series of bonds include two that were due for maturity in 2024, one in 2025 and one in 2026. According to Moody’s, VRL’s ratings reflect the company’s unsustainable capital structure characterised by high financial leverage at the holding company and its perennially weak liquidity amid a period of continued large negative free cash flow.

Moody’s believes the company will still face material liquidity issues over the upcoming 24 months and that default risk remains high.

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