Vedanta shares rise amid report on parent VRL's $5.2 billion bond refinancing plan

Shares of Vedanta Ltd were trading higher in Tuesday's trade amid a report suggesting the Anil Agarwal-led company's parent Vedanta Resources Ltd (VRL) was looking to refinance $5.2 billion dollar bonds. Quoting sources, Bloomberg reported that a part of the proceeds will be used to refinance $3.6 billion of bonds maturing between 2028 and 2033, and $1.6 billion of loans due from 2028 onward, adding that eight banks, including JPMorgan Chase & Co, Citigroup Inc, Deutsche Bank and Barclays Plc have been hired for the deal. The aim is to lower borrowing costs by replacing expensive debt, the report suggested.

Amid the report, Vedanta shares rose 1.82 per cent to hit a high of Rs 309.80 on BSE. To recall, S&P Global had on May 14 upgraded VRL to 'BB' while assigning a stable outlook thanks to improving operating performance and liquidity. Moody's suggested Ba3 rating on VRL (outlook positive), while Fitch on April 2 suggested BB rating on VRL (outlook stable). 

S&P said newly secured liquidity lines, robust operating cash flows, and better access to traditional funding sources will also bolster the liquidity of the India-focused commodity company. Vedanta Resources Ltd.'s improving cost structure and rising product prices will strengthen its earnings and credit metrics, S&P said.

S&P estimated Ebitda of about $7 billion in each of fiscal years 2027 and 2028. This, coupled with lower dividends, will increase the company's discretionary cash flow, the rating agency had said.

"As a result, we now estimate S&P Global Ratings' adjusted debt will decline by US$500 million in fiscal 2027 and US$1 billion in fiscal 2028," it said.

Fitch, on the other hand, expected VRL's capex to rise to $2.3-2.6 billion over FY26-FY29 and dividends to $250 million from FY27. This will be aided by VRL's improved credit profile, it said on April 2 

"We expect any additional investing or financing cash outflows to be within the scope of VRL's deleveraging plans. A significant deviation from these assumptions, particularly if it coincides with weaker EBITDA, could present credit risks," it said on April 2.