Vedanta Resources' funding options will improve on raising debt cap at subsidiary: S&P
Singapore: S&P Global Ratings said on Wednesday that Vedanta Resources Ltd can increase funding options to address refinancing needs if it secures consent to raise the cap on total debt at subsidiary guarantor Twin Star Holdings Ltd.
The exercise does not have any immediate effect on S&P rating on Vedanta Resources.
Investors have been more receptive to debt issued via Twin Star than that from Vedanta Resources, a global miner. Fundraising via Twin Star would help address refinancing, especially a USD1 billion bond due July 2022.
It could also help Twin Star increase its stake in operating subsidiary Vedanta Ltd.
Both of these outcomes will improve credit profile on Vedanta Resources by improving liquidity, the key rating constraint. "We expect the additional debt at Twin Star to be largely neutral to Vedanta Resources' leverage as part of the additional debt will likely be used for refinancing."
To the extent that additional debt is used to increase Twin Star's stake in Vedanta Ltd, S&P believes increased cash flows from the subsidiary to Vedanta Resources will mitigate any effect on leverage.
Vedanta Resources has launched a consent solicitation to request holders of two tranches of its bonds guaranteed by Twin Star to increase its debt cap to USD5 billion from an existing USD3.6 billion.
This will follow completion of the open offer in April. Twin Star is Vedanta Resources' wholly-owned subsidiary which in turn owns about 44.6 per cent of Vedanta Ltd. (ANI)