The Hindu Business Line : S&P puts Vedanta on credit watch

Mumbai, June 29 Standard & Poor’s Ratings Services has placed a ‘BB’ rating on the London-based Vedanta Resources Plc (Vedanta) with negative implications.

The rating on its senior unsecured debt has been placed on CreditWatch, the agency said in a press statement.

The CreditWatch listing reflects S&P’s view that Vedanta’s sizable capital expenditure programme at over $7.6 billion and appetite for debt-funded acquisitions in a severe industry downturn increases its risk.

Despite project deferrals and 20 per cent reduction in major expansion project costs, Vedanta’s capex pipeline will place demand on its funding and liquidity during the current period of uncertain internal cash flow generation, S&P said.

“Although Vedanta is taking decisive actions to address the industry downturn, including steps to reduce operating costs at all businesses, especially in aluminium and copper through full integration, we expect weak industry conditions to prevail,” said Ms Anita Yadav, credit analyst, S&P.

The increases in debt at Vedanta, or debt guaranteed by it, despite some of the non-recourse project finance debt arranged by its subsidiaries, Vedanta Aluminium and Sterlite Energy, heighten the risk in the holding company and operating company structure, she added.

The CreditWatch takes into consideration the recent acquisition of the mining assets of VS Dempo & Co for $368 million by Vedanta’s subsidiary Sesa Goa and the proposed $1.25-billion convertible bond issue.

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