VRL Gets Third Upgrade from S&P in a Year of Re-rating for Vedanta Group

(MENAFN- Adfactors PR) Bengaluru, December 23, 2024: Amidst a year of growth and multiple group-level re-ratings, Vedanta Resources Limited (VRL) received another upgrade from S&P Global on December 20. The agency upgraded VRL’s corporate family rating from ‘B-’ to ‘B’. With this, VRL’s rating by S&P has gone up by five notches from ‘CC’ in Dec 2023 to ‘B’ in Dec 2024.

S&P said in its report that the upgrade comes after VRL obtained the minimum acceptances needed to close its consent solicitation exercise for 2028 bonds. “The stable outlook reflects our expectation that refinancing risks will be more manageable after the transaction given a newfound funding flexibility and improved capital market access,” the agency said in its report.

“The stable outlook also reflects the company's sound underlying operations, which should support internal cash generation and refinancing efforts,” it added.

The S&P upgrade follows a successful consent solicitation exercise initiated by VRL. In this, VRL's bondholders were requested to deliberate on the company amending the terms and conditions of its 13.875% bonds due in 2028. The proposal which was supported by 99.53% of early voting bondholders (by the December 16 deadline)

will provide VRL with increased debt headroom, helping it efficiently manage its debt maturity profile and improve its capital structure.

VRL’s steady focus on deleveraging and strengthening its balance sheet also translated into upgrades by other major rating agencies. Moody’s significantly improved its outlook on VRL’s bonds moving its ratings by 4 notches from “Ca2” to “B3” during the year. It cited growing investor confidence as the underlying reason for its consecutive upgrades.

The group-level re-rating also extends to VRL’s Indian subsidiary, Vedanta Ltd. (VEDL), which received a series of upgrades in the past few quarters. Earlier this month, CRISIL upgraded its ratings on Vedanta’s long-term bank facilities and debt instruments to ‘AA’ from ‘AA-’ while reaffirming the short-term rating at A1+. Similarly, ICRA upgraded Vedanta Limited's long-term credit rating by a notch to AA in September, citing the company’s strengthened credit profile.

All three agencies highlighted Vedanta’s commitment to deleveraging its balance sheet, reduced financing costs, expected increase in profits in the near term, lower cost of production, and its greater ability to withstand cyclicality in the commodity business as reasons for this vote of confidence.

VRL’s focus on deleveraging has reduced debt by ~$4.7 billion in the past two years, as Chairman Anil Agarwal shared in a letter to shareholders in November this year. The upgrades also reflect Vedanta’s ability to consistently tap bond markets. In the past four months, VRL has raised US$2 billion through bond issuances, achieving ~ 300 bps interest cost reduction and pushing out its debt maturities considerably, which has helped strengthen the company’s capital structure considerably.

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