Vedanta Resources terminates Moody’s’ services after unfavourable ratings

Vedanta Resources terminated the services of Moody’s days after it downgraded the company’s ratings. On Monday, Moody’s had downgraded the company’s corporate family rating to B3 from B2.

The company stated on Thursday, “Vedanta Resources Limited hereby announces that it has today given notice to Moody’s Investor Services to discontinue its rating engagement and to withdraw all the outstanding ratings,” as mentioned in a report in The Economic Times.

The termination of services came after the holding company of Anil Agarwal-helmed empire disputed the ratings action of Moody’s on Tuesday. It called Moody’s concerns far-fetched and unreasonable, and stated that it was in a very comfortable position to address all its debt maturities with a strong balance sheet and robust liquidity. 

The company had further added in the statement that the ratings agency had ignored its repeated explanations and liability management plans. It said that the ratings were based on “unreasonable and subjective assessment”. 

Moody’s, in its ratings, had said, “Moody's Investors Service has downgraded the corporate family rating (CFR) of Vedanta Resources Limited (VRL) to B3 from B2. At the same time, Moody's has downgraded the ratings to Caa1 from B3 on the senior unsecured bonds issued by VRL, and those issued by Vedanta Resources Finance II Plc and guaranteed by VRL.” It said that the outlook remains negative. 

"Today's rating action reflects VRL's rising refinancing pressure given that the company has yet to obtain funding for its large maturities due in April 2023 and Vedanta Resources Finance II Plc's due in May 2023, which is taking longer than Moody's earlier expectations of completion by October 2022. The proximity of the large maturities' due dates without a refinancing completed well in advance indicates VRL's aggressive liability management," said Kaustubh Chaubal, a Senior Vice President at Moody’s in the ratings report.

Moody’s had said that the holding company, VRL’s weak liquidity and high refinancing needs with large, looming debt and maturities are a pertinent credit risk, especially keeping in mind the rising inflation and higher interest rates. 

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