Global rating agency S&P Global, which sees rising risks of a “conventional payment default’’, has downgraded Vedanta Resources.
Vedanta Resources is the parent of Vedanta Ltd, the diversified domestic firm in the midst of a mega restructuring.
The downgrade by S&P came even as VRL announced that it has secured a $1.25-billion loan from private credit lenders to refinance or repay part of the $3.2 billion debt maturing in 2024 and 2025.
The Anil Agarwal-led firm said the fundraising will help “create a long-term sustainable capital structure” and demonstrate its continued ability to access global capital markets and investor confidence in the underlying business.
Though it did not disclose the identity of the lenders, the company said loans have been raised from a group of reputable financial institutions to refinance existing liabilities.
VRL added that it is also seeking the consent of existing bondholders to extend the debt maturity and amend certain covenants and seek waivers to improve the credit package of its bonds that are due to mature in 2024.
S&P downgraded the company’s debt instruments to ‘CC’ from ‘CCC’ on potential bond extensions. CC indicates `highly vulnerable’ status.
“The successful completion of a liability management exercise initiated by Vedanta Resources Ltd to extend the maturities of three of its US dollar-denominated bonds will constitute a distressed exchange under our criteria,” S&P observed.
The rating agency went on to add that the parent’s proposed liability management exercise involving three of its US dollar-denominated bonds of a cumulative amount of $3.2 billion is a distressed transaction under its criteria.
