S&P cuts Vedanta Resources

S&P said it lowered its ratings for Vedanta Resources Ltd. and its debt to CCC from B- and placed the ratings on CreditWatch with negative implications.

“The proximity of Vedanta Resources' large bond maturity in January 2024 has increased the likelihood of the company undertaking a liability management exercise. Vedanta Resources has initiated talks with bondholders to help address the company's bond maturities of about $3 billion, including $1 billion in January 2024. We believe Vedanta Resources remains committed to avoiding a payment default. We could assess such a liability management transaction to be distressed,” S&P said in a press release.

The agency said it considers it “highly likely” Vedanta will make the payment due on the January bond.

“However, the sources for the remaining funding gap, which we estimate to be about $600 million, are not yet in place. Further funds to redeem the bond could depend on events such as the transfer of general reserves to retained earnings at subsidiary Hindustan Zinc Ltd., or further asset sales,” S&P said.

S&P warned of a possible downgrade, especially if it views the liability management exercise to be distressed.

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