Vedanta shares fall as Moody's downgrades parent firm

The rating of Vedanta Ltd's parent company, Vedanta Resources Ltd, was downgraded by Moody's Investors Service on Wednesday, which resulted in a nearly 7% decline in share price. 

The rating of Vedanta Resources Ltd (VRL) has been lowered by Moody's Investors Service due to the increased risk of debt restructuring over the next months and the company's inability to make headway in refinancing its future debt maturities. 

Moody's said it has downgraded the corporate family rating of VRL to Caa2 from Caa1.

At the same time, Moody's has maintained a negative outlook.

"The downgrade reflects the elevated risk of debt restructuring over the next few months because VRL has not made any meaningful progress on refinancing its upcoming debt maturities, in particular the USD 1 billion bonds maturing each in January 2024 and August 2024," Kaustubh Chaubal, Moody's Senior Vice President and lead analyst on VRL, said.

Due to its low liquidity and high interest costs in the context of tighter financing circumstances on international capital markets, VRL's credit quality is restricted, the agency observed.

To relieve some of the burden brought on by the holding company's impending cash needs, VRL sold a 4.3 percent interest in its subsidiary Vedanta Ltd in August 2023 for almost USD 500 million.