Vedanta Resources: Funding Gaps, Prospective Plans and THL Zinc Deal
Panelists:
- Jeff Burton, senior legal analyst (moderator);
- Malvika Joshi, India editor;
- Junguang Tan, director; and
- Ken Yao, credit analyst.
On Monday, Feb. 27, we held a discussion of Vedanta Resources Ltd., which is among India’s largest high-yield issuers and one of the most volatile Asian credits. We considered its funding gap, prospective financing plans, the potential THL Zinc related-party transaction and the issuance/credit structure of the dollar bonds.
As Vedanta Resources approaches the end of its 2023 fiscal year on March 31, it has achieved the halfway point of its $4 billion deleveraging target. However, the company has significant maturities coming due in fiscal 2024/2025, and the funding gap appears daunting, especially in the fiscal first quarter (ending June 30), when it faces about $1.7 billion of maturities.
If Vedanta Ltd.’s recently announced related-party sale of THL Zinc to subsidiary Hindustan Zinc for about $3 billion goes through, much of the fiscal 2023 debt maturity pressure would be alleviated, and fixed-income markets have begun pricing in such a possibility despite uncertainties. Vedanta Ltd. is a key subsidiary and source of credit support of Vedanta Resources.
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