Moody's upgrades Vedanta's senior unsecured notes

Moody's Investors Service has said it has upgraded Vedanta's senior unsecured notes to B3 from Caa1. It has affirmed holding company Vedanta Resources Ltd's (VRL) B2 corporate family rating, Moody's Investors Service has said in a statement. Moody's has also changed the outlook on all ratings to stable from negative. "Moody's has upgraded to B3 from Caa1, its rating on the senior unsecured notes issued by VRL and those issued by VRL's wholly-owned subsidiary, Vedanta Resources Finance II Plc and guaranteed by VRL," Moody's Vice-President and Senior Credit Officer Kaustubh Chaubal said.

He added that the affirmation of the corporate family rating (CFR) and the change in outlook to stable reflect VRL's improving financial metrics because of firm commodity prices and its cost-competitive operations. "These factors and the company's progress in simplifying its complex organisation structure will reduce cash leakage and help to sustainably lower leverage," Chaubal said.

The stable rating outlook reflects Moody's view that VRL's operating and financial metrics will continue to improve under the rating agency's base case commodity price sensitivities. The upgrade of the senior unsecured notes rating reflects the narrowing of the difference between VRL's CFR and its senior unsecured notes' rating to one notch from two notches previously. "We consider that subordination risk has reduced for the holdco creditors at VRL."