S&P Global upgrades rating of Vedanta Resources

Vedanta Resources Limited (VRL), the parent firm of Mumbai-based mining conglomerate Vedanta Ltd, has received a rating upgrade from S&P Global Ratings. 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 December last year. “We raised our issuer credit rating on Vedanta Resources Ltd. to ‘B’ from ‘B-‘ and raised our issue ratings on the company’s guaranteed bonds to ‘B-‘ from ‘CCC+’,” the rating agency said.

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 company’s focus on deleveraging and strengthening its balance sheet also translated into upgrades by other major rating agencies.

VRL’s focus on deleveraging has reduced debt by USD 4.7 billion in the past two years, Chairman Anil Agarwal said 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 USD 2 billion through bond issuances, achieving 300 basis point interest cost reduction and pushing out its debt maturities considerably, which has helped strengthen the company’s capital structure considerably.