“The India-based pure useful resource firm has debt servicing obligations of about USD 3 billion, together with curiosity and inter firm loans,” it stated. “It’ll have at the least one other USD 1 billion obligations that require funding till March 2024.”
Vedanta Assets is the mum or dad firm of Mumbai-listed Vedanta Ltd that declared a fifth interim dividend for 2022-23 fiscal final month.
“The ranking on Vedanta Assets displays our expectation that it’ll safe extra funds to assist liquidity past December 2023,” S&P stated. “The corporate is discussing with banks and traders on a number of funding choices for at the least one other USD 2 billion.”
Profitable closure of a few of these discussions will facilitate the cost of its USD 1 billion bond due January 2024.
“Failure to show a reputable refinancing plan at the least six months earlier than the bond maturity might result in draw back ranking strain,” it stated, including it didn’t consider that Vedanta Assets is not going to undertake any transaction that may be considered distressed.
Vedanta Assets’ funding initiatives are additionally supported by its capability to borrow at its subsidiary, Twin Star Holdings Ltd. The latter instantly owns a 46 per cent stake within the working firm, Vedanta Ltd.
“Vedanta Assets has been extra profitable up to now in elevating debt on the Twin Star stage, given the structural seniority of Twin Star debt to Vedanta Assets debt.
“We estimate Twin Star has the capability to lift about USD 500 million beneath its debt covenants,” the ranking company stated.
Vedanta Assets’ USD 1 billion bond maturing in January can also be a part of the debt at Twin Star. Its USD 400 million financial institution mortgage maturing through the 12 months are additionally a part of the debt at intermediate holding corporations, Twin Star, and Vedanta Netherlands Investments B.V.
“Whereas the current fund-raising is credit-positive, Vedanta Assets will grow to be extra depending on exterior funding. This is because of declining money on the firm’s working subsidiaries, which has traditionally been a supply of credit score power,” it stated.
S&P estimated that Vedanta Ltd had consolidated money of about USD 2.5 billion as of March 31, 2023, down from about USD 4 billion as of March 31, 2022.
The corporate will use USD 930 million of this to pay dividends in April.
Nevertheless, exterior funding danger has elevated because of difficult market circumstances.
“Though Vedanta Assets has a observe document of elevating funds in confused market circumstances and is keen to lift costly debt to refinance, fixed refinancing danger continues to carry again the corporate’s credit score profile,” S&P stated.
“Vedanta Assets Ltd. will seemingly have sufficient liquidity till December 2023,” it added.