S&P downgrades Vedanta, calls bond restructuring a distressed transaction

livemint.com:

Vedanta Resources to SD, or selective default, calling the company’s recent bond restructuring exercise as a distressed transaction. This is the second downgrade for the company this week after Moody’s downgraded its corporate family rating to Caa3 from Caa2. "We view Vedanta Resources' just concluded liability management exercise, which involved three of its US dollar-denominated bonds, as a distressed transaction," S&P analysts noted.

Vedanta Resources, the London-based parent of India’s Vedanta Ltd, on Friday said that it has transferred a consent fee due to its bondholders, kickstarting the restructuring process. The restructuring will see the redemption date of three of Vedanta’s outstanding bond series delayed by 29-52 months in exchange of a part payment upfront, higher interest rates on two bond series, and a consent fee equal to 2% of the principal. The company said that it will make the part payments as early as Friday itself or no later than the deadline of 7 February.

On Tuesday, Moody’s senior vice president Kaustubh Chaubal said: “We view the debt restructuring as default avoidance and assess that the creditors have incurred an economic loss with respect to the original promise. We consider the transaction to be a distressed exchange under our criteria, which underpins our downgrade of VRL’s ratings." S&P had downgraded Vedanta Resources just last month to CCC from CC as the company started seeking investor consent for the bond restructuring exercise. It had warned back then that once the plan is implemented, the company’s long-term credit rating could fall to SD.