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Vedanta Resources was downgraded to CCC from B- by S&P on the back of news regarding potential bond extensions. S&P assesses that this liability management exercise could likely be a distressed transaction. With Vedanta having a $1bn dollar bond maturity in January 2024, the company has only partly addressed the amount via a sale of ~4% stake in Indian subsidiary Vedanta Ltd. in August. S&P estimates a funding gap of about $600mn that has not yet been addressed. This could be met through other asset sales or transfer of general reserves to retained earnings at Hindustan Zinc. However, the presence of large maturities beyond January “could make liability management a preferred option” instead of paying down the January dollar bond. Last week, Vedanta was downgraded to Caa2 by Moody’s citing an elevated risk of debt restructuring.
Vedanta’s dollar bonds were trading steady with its 6.125% bonds due August 2024 at 64.66.