15 January 2024
Mumbai: Vedanta Resources, the London-based parent of India's Vedanta Ltd, has bought itself breathing room as it received investor consent on Wednesday to delay the maturity of a cumulative $3.2 billion of its outstanding corporate bonds. Vedanta Resources has been locked in a cycle of chasing capital every few months to refinance maturing debt. In the past one year, as liquidity in the global markets evaporated, the company found itself in a tight spot. It had nearly $2 billion of bonds maturing in 2024, including $1 billion this month, even as the flow of dividends from operational subsidiaries in India slowed down. Now, with investors consenting to the company restructuring its outstanding commercial papers, Vedanta has no debt maturities till April 2026. "This just eases off all the pressure on them," a senior banker said on condition of anonymity. "It basically gives them a glide path to do whatever they need to do in terms of the demerger or all the other activities that they want to do. They have more time to sell assets. They don't need to do any fire sales," the banker said. A person aware of the company's plans said its deleveraging game plan will now involve paying lenders through cash flows and the sale of non-core assets. However, the investor approval also brings a concern for the company. Changing the terms of its commercial papers will likely result in a downgrade of its credit rating. n 14 December, a day after Vedanta had sought investor pproval for the restructuring, S&P had put out a note saying the xercise constitutes "a distressed exchange under our criteria," nd had downgraded the company's rating one notch to CC' from ccc t also said the three bonds whose maturity has been delayed will ikely be downgraded to a 'D' rating by S&P after investor consent ame through. The company's long-term credit rating could fall to SD' or selective default from 'CC' at present. owever, S&P also noted shortly after the downgrade that it xpects to raise the ratings "to a level we believe will reflect the iquidity position and capital structure of Vedanta Resources post-transaction." The subsequent rating could be 'CCC' or higher, depending on the liquidity position of the company, they noted.
Mumbai: Vedanta Resources, the London-based parent of India's Vedanta Ltd, has bought itself breathing room as it received investor consent on Wednesday to delay the maturity of a cumulative $3.2 billion of its outstanding corporate bonds. Vedanta Resources has been locked in a cycle of chasing capital every few months to refinance maturing debt. In the past one year, as liquidity in the global markets evaporated, the company found itself in a tight spot. It had nearly $2 billion of bonds maturing in 2024, including $1 billion this month, even as the flow of dividends from operational subsidiaries in India slowed down. Now, with investors consenting to the company restructuring its outstanding commercial papers, Vedanta has no debt maturities till April 2026. "This just eases off all the pressure on them," a senior banker said on condition of anonymity. "It basically gives them a glide path to do whatever they need to do in terms of the demerger or all the other activities that they want to do. They have more time to sell assets. They don't need to do any fire sales," the banker said. A person aware of the company's plans said its deleveraging game plan will now involve paying lenders through cash flows and the sale of non-core assets. However, the investor approval also brings a concern for the company. Changing the terms of its commercial papers will likely result in a downgrade of its credit rating. n 14 December, a day after Vedanta had sought investor pproval for the restructuring, S&P had put out a note saying the xercise constitutes "a distressed exchange under our criteria," nd had downgraded the company's rating one notch to CC' from ccc t also said the three bonds whose maturity has been delayed will ikely be downgraded to a 'D' rating by S&P after investor consent ame through. The company's long-term credit rating could fall to SD' or selective default from 'CC' at present. owever, S&P also noted shortly after the downgrade that it xpects to raise the ratings "to a level we believe will reflect the iquidity position and capital structure of Vedanta Resources post-transaction." The subsequent rating could be 'CCC' or higher, depending on the liquidity position of the company, they noted.
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