Key Points
Moodys downgraded the credit rating of Vedanta Resources Ltd (VRL), the London-based parent of Vedanta Ltd, as the company goes ahead with its bond restructuring exercise that will delay its immediate debt obligations..
. Moodys analysts further noted that the companys ratings reflect its unsustainable capital structure characterized by high financial leverage at the holding company and its perennially weak liquidity amid a period of continued large negative free cashflow"..
Vedanta Resources is likely to face material liquidity issues over the coming 24 months and the risk of default risk remains high, the analysts noted..
Analysts at S&P have also warned that once the companys bond restructuring exercise is implemented, the three bonds whose maturity has been delayed will likely be downgraded to a D rating..
. However, the S&P analysts also noted that shortly after such a downgrade, they expect to raise the ratings to a level we believe will reflect the liquidity position and capital structure of Vedanta Resources post-transaction.".
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