Vedanta Resources was downgraded to B3 from B2 by Moody’s and its senior unsecured notes to Caa1 from B3. This comes on the back of “rising refinancing pressure” given that Vedanta is yet to obtain funding for its bonds due April 2023 and Vedanta Resources Finance II’s bonds due in May 2023. The rating agency notes that Vedanta’s credit risk is a pertinent issue and that its capital structure is unsustainable with weak liquidity and poor liability management. Moody’s estimates that the holdco Vedanta Resources would have reduced its gross debt by almost $1bn in 1H 2023. However, it would continue to have substantial cash needs over an 18-month period beginning October 2022 to address $3.8bn in external debt maturities, $450mn of an intercompany loan and annual interest payments of $600mn. Moody’s does note that the conglomerate is negotiating financing arrangements to address part of its near-term debts, although the quantum and timing remain are uncertain.

Vedanta’s dollar bonds dropped by over 1.2 points with its 8.95% 2025s down the most, by 3.4 points to trade at 63.75 cents on the dollar.

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