Debt refinancing tougher for Vedanta Resources in tight market

Rating agency Standard and Poor’s (S&P) said the refinancing by Vedanta Resources Ltd. upcoming maturities of more than $2 billion over the next 6 months has become more difficult given the tightening of conditions in the capital markets.

Although current capital market conditions have reduced Vedanta Resources‘ financing options, its strong underlying business continues to support the company’s ability to meet its immediate debt obligations.

Maturities during this period include its $1 billion bond maturing in July 2022. It previously expected the maturities to be refinanced with a new bond issue earlier this year.

S&P Global Ratings has a “B-” rating on Vedanta Resources with a stable outlook.

Dividends from Vedanta Ltd, its subsidiary, will largely help service Vedanta Resources’ debt over the next two quarters. Approximately $500 million of new financing at Vedanta Resources, combined with internal resources, will help manage debt maturities during this period. A fundraising of this magnitude should be feasible given the company’s size, track record and underlying operating dynamics, he said.

In the absence of any fundraising, the company has the ability to increase the dividends of Vedanta Ltd. However, the ability to raise new funds in the second half of fiscal 2023 (ending March 31, 2023), including access to capital markets, will be essential for the company to maintain its capital structure. . Vedanta Resources’ debt servicing capacity also remains dependent on the strength of commodity prices, he added.

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