Vedanta Resources Limited (VRL) has received its third upgrade from S&P in a year, increasing its corporate family rating from ‘B-‘ to ‘B’. This upgrade comes after VRL successfully completed its consent solicitation exercise, which will provide it with increased debt headroom and a more manageable debt maturity profile. The upgrade also reflects VRL’s sound underlying operations, which support internal cash generation and refinancing efforts. S&P’s stable outlook is based on VRL’s improved capital market access and reduced refinancing risks.
Moody’s and CRISIL/ICRA have also upgraded VRL, citing its commitment to deleveraging, reduced financing costs, and expected increase in profits. VRL has reduced its debt by $4.7 billion in the past two years, and has successfully tapped the bond markets, raising $2 billion and reducing its interest costs by 300 basis points. As a result, VRL’s focus on deleveraging has improved its capital structure. The upgrades reflect Vedanta’s ability to consistently access the bond market, improving its ability to withstand cyclicality in the commodity business. The ratings agencies expect VRL’s strong performance to continue, with a stable outlook for the company.