Vedanta fell 2.09% to Rs 117.05 after Moody's Investors Service downgraded Vedanta Resources corporate family rating (CFR) to B1 from Ba3.
Moody's has also downgraded the rating on senior unsecured bonds issued by Vedanta and those issued by its wholly owned subsidiary, Vedanta Resources Finance II Plc and guaranteed by Vedanta, to B3 from B2. The outlook on all ratings is stable.
The downgrade of Vedanta's ratings was triggered by a sustained deterioration in the company's credit profile, and our expectation that its credit metrics will remain weak for the previous ratings, Moody's said in a press release.
Moody's points out that the low and volatile commodity price environment will mean that Vedanta's earnings will unlikely improve significantly. Consequently, the company's financial profile will take longer than anticipated to strengthen.
The rating actions also reflect Moody's revised view on the treatment of the loan raised in 2018 by Vedanta's sole shareholder, Volcan Investments, for Vedanta's privatization.
Vedanta, a subsidiary of Vedanta Resources, is one of the world's leading diversified natural resource companies with business operations in India, South Africa, Namibia and Australia. Vedanta is a leading producer of oil & gas, zinc, lead, silver, copper, iron ore, aluminum, steel and commercial power.
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