Moody’s Investors Service on Wednesday said it has changed its outlook on Vedanta Resources to ‘negative’ from ‘stable’, owing to its largest near-term refinancing requirement amid tightening liquidity in the capital markets.

The rating agency affirmed Vedanta Resources Ltd’s (VRL) B2 corporate family rating and the B3 rating on the senior unsecured notes issued by VRL and those issued by its wholly owned subsidiary Vedanta Resources Finance II Plc and guaranteed by VRL.

“The change in outlook to negative reflects holding company VRL’s large near-term refinancing requirements amid tightening liquidity in the capital markets,” said Kaustubh Chaubal, vice-president and senior credit officer of Moody’s.

“The continued delay in refinancing its upcoming debt maturities with long-term funding raises concerns about the company’s liquidity management, even as supportive commodity prices have improved its key financial metrics.”

Moody’s said it considers the holding company’s persistently weak liquidity and high refinancing needs as signs of an aggressive risk appetite, with implications for the company’s financial strategy and risk management.

“Today’s rating action considers the impact of VRL’s aggressive liquidity management and refinancing practices on its credit profile, which Moody’s regards as credit negative,” the rating agency said in a statement.

The affirmation of the corporate family rating reflects Moody’s view that VRL’s operations are solidly positioned with favourable underlying demand and commodity prices that support continued positive free cash flow generation. VRL is about to enter its peak years of long-term debt maturities in fiscal years ending March 2023 and March 2024.