S&P Global Ratings has downgraded Vedanta Ltd parent Vedanta Resources’ long-term issuer credit rating and long-term issue ratings on specific bonds due in January 2024, August 2024, and March 2025 from ‘CCC’ to ‘CC’. The downgrade stems from the ongoing liability management exercise initiated by the Anil Agarwal-led company to extend the maturities of its three US dollar-denominated bonds. S&P considers the successful completion of this exercise as a distressed exchange, potentially leading to a further downgrade of Vedanta Resources to ‘SD’ (selective default) and lowering the ratings on the three bonds to ‘D’.
The credit watch status indicates the possibility of a downgrade to ‘SD’ if the proposed transaction is finalized. Additionally, S&P could lower the ratings on the three bonds to ‘D’. The rating agency views Vedanta Resources’ liability management exercise as distressed, as the new terms are considered insufficient compensation for the extended maturities and deviations from the original promises made.
If Vedanta Resources decides not to proceed with the transaction, S&P Ratings sees an increased risk of a conventional payment default. This heightened risk is attributed to the upcoming $1 billion maturity in bonds due on January 21, 2024, with limited progress on alternative repayment plans.
Furthermore, S&P has revised the CreditWatch implications on Vedanta Resources’ bond due in April 2026 (not part of the proposed transaction) from negative to developing. This adjustment reflects the uncertainty surrounding the outcome of the transaction on the other bonds, indicating that the rating on the April 2026 bond could move in either direction based on the overall result.
