Vedanta share price plunges over 6% to hit 52-week low after Moody’s rating downgrade

Moody’s downgraded Vedanta Resources’ Ltd (VRL) corporate family rating (CFR) from Caa1 to Caa2 over elevated risks of debt restructuring over the next few months. 

With the current downgrade, the outlook remains negative for the parent company of Vedanta Ltd, as per the global ratings agency.

Read here: Moody’s downgrades Vedanta Resources’ corporate family rating to Caa2; outlook remains negative

The rating agency also downgraded its rating on the senior unsecured bonds issued by Vedanta Resources and those issued by Vedanta Resources’ wholly owned subsidiary, Vedanta Resources Finance II Plc, and guaranteed by Vedanta Resources. The rating was downgraded to Caa3 from Caa2.

“The downgrade reflects elevated risk of debt restructuring over the next few months because VRL has not made any meaningful progress on refinancing its upcoming debt maturities, in particular the $1 billion bonds maturing each in January 2024 and August 2024,” says Kaustubh Chaubal, a Moody’s Senior Vice President and lead analyst on VRL.

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“VRL’s consolidated debt/EBITDA leverage was 3.7x as of March 2023 – substantially strong for its Caa category CFR. Still, the company continues to face challenges in refinancing its debt, a reflection of reduced appetite from the lending community, and a key credit concern,” Moody’s said in its note.

Meanwhile, on September 21, Vedanta announced that its board approved to raise ₹2,500 crore on a private placement basis, as non-convertible debentures (NCDs). According to the company, the fund-raising was part of its routine refinancing undertaken in the ordinary course of business.

Also Read: Adani Ports to buy back $195 million notes due 2024 in cash tender offer

Vedanta share price has fallen more than 31% this year so far. The stock is down over 23% in the last three months.

At 9:45 am, Vedanta shares were trading 4.69% lower at ₹213.55 apiece on the BSE. 

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Updated: 27 Sep 2023, 09:46 AM IST