Vedanta Resources Achieves Significant Rating Upgrade from S&P Global Ratings

Vedanta Resources Limited (VRL), the parent company of Vedanta Ltd in Mumbai, has seen its corporate family rating improved by S&P Global Ratings. The rating was elevated from B- to B, marking a five-notch increase since December last year when it stood at CC. This upgrade reflects VRL's successful consent solicitation for its 2028 bonds.

Representative image

S&P Global Ratings stated, "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 agency noted that the stable outlook is due to reduced refinancing risks, enhanced funding flexibility, and better access to capital markets. These factors are expected to support VRL's internal cash generation and refinancing efforts.

Focus on Deleveraging

The company has been concentrating on reducing its debt and strengthening its financial position. In a letter to shareholders in November, Chairman Anil Agarwal highlighted that VRL has cut its debt by USD 4.7 billion over the past two years. This focus on deleveraging has led to upgrades from other major rating agencies as well.

In recent months, VRL has successfully raised USD 2 billion through bond issuances. This move resulted in a 300 basis point reduction in interest costs and extended debt maturities significantly. Such actions have notably bolstered the company's capital structure.

The stable outlook also considers VRL's robust underlying operations, which are expected to aid in generating cash internally and supporting refinancing initiatives. The company's consistent ability to access bond markets further underscores its financial resilience and strategic planning.

Vedanta's efforts in managing its finances have not only improved its ratings but also demonstrated its capability to navigate complex financial landscapes effectively. These developments indicate a promising trajectory for the company as it continues to focus on financial stability and growth.