Moody’s cuts rating on Vedanta Resources citing high default risk

BENGALURU (Reuters) – Moody’s Investors Service on Tuesday downgraded miner Vedanta Resources’ corporate family rating (CFR) and senior unsecured bonds, a second such move since September, citing concerns over the company’s ability to address its cash needs.

The rating agency downgraded Vedanta Resources’ CFR to Caa3 from Caa2 on Tuesday and its senior unsecured bonds to Ca from Caa3, while maintaining its negative rating outlook.

Moody’s said that Vedanta Resources, the parent of Indian miner Vedanta Ltd, will face material liquidity issues over the upcoming 24 months and warned that the “default risk” remains high.

The group has an outstanding debt of $6.4 billion, including a $4.5 billion payment due by fiscal 2025, which prompted rating agencies to downgrade the firm throughout last year.Calling last week’s debt restructuring by UK-based Vedanta Resources as “default avoidance”, Moody’s said that the creditors have incurred an “economic loss” with respect to the original promise.

Vedanta Resources had said last week it has received bondholders’ support to restructure some of its near-term debt.

“We consider the transaction to be a distressed exchange under our criteria, which underpins our downgrade of Vedanta Resources’ ratings,” said Kaustubh Chaubal, Moody’s Senior Vice President in the report.

S&P Global Ratings downgraded its rating on Vedanta Resources in September and December.

(Reporting by Ashish Chandra in Bengaluru; Editing by Eileen Soreng)