Vedanta Limited experienced a 3% dip in its stock value, dropping to Rs 253 in early trading on January 10, following Moody’s Investors Service’s second downgrade of the company’s corporate family rating (CFR) and senior unsecured bonds. This marks the second downgrade since September, signaling concerning financial challenges for Vedanta Resources.
Moody’s downgraded Vedanta Resources’ CFR to Caa3 from Caa2, and the senior unsecured bonds to Ca from Caa3, maintaining a negative outlook. The rating agency predicts significant liquidity challenges for Vedanta Resources in the next 24 months, posing a high risk of default.
Moody’s Senior Vice President, Kaustubh Chaubal, expressed concerns about the debt restructuring, characterizing it as default avoidance and indicating that creditors may incur an economic loss compared to the initial promise. This evaluation, classifying the transaction as a distressed exchange under Moody’s criteria, serves as the basis for the downgrade of Vedanta Resources’ ratings.
Notably, this is the second downgrade within a few months, as S&P Global Ratings had previously lowered its rating for Vedanta Resources in both September and December.
The consecutive downgrades highlight the persisting financial challenges faced by Vedanta, making it crucial for stakeholders and investors to closely monitor the unfolding situation.