Vedanta Resources PLC, Vedanta Limited's holding company, has begun conversations with lenders to raise $1 billion in foreign currency bonds, according to persons familiar with the matter, who requested anonymity.

According to the sources stated above, billionaire Anil Agarwal's metals and mining conglomerate intends to refinance up to $600 million in notes maturing in 2026 while also raising new funds for equity infusion in some of the group's existing and future businesses. "Vedanta Resources has nothing more to add than what has already been shared on the SGX [Singapore Exchange Ltd] until the transaction is completed," a Vedanta spokeswoman stated in response to a credible source.

Stake Sales and Debt Reduction

Vedanta Limited raised Rs 8,500 crore in July in a qualified institutional placement (QIP) offering, with Rs 6,375 crore set aside to cover debts owed to Oaktree Capital, Deutsche Bank, and Union Bank of India. On June 25, the business owed Rs 17,470 crore to Oaktree, Deutsche Bank, and UBI.

Earlier in June, Finsider International Company Limited, a Vedanta group business, sold over 98 million shares to raise Rs 4,184 crore to reduce its debt. In February, the same promoter firm sold around 65 million shares in a block transaction to raise Rs 1,737 crore. In August, Vedanta Limited raised and sold Hindustan Zinc Limited shares worth around Rs 6,500 crore through an offer for sale. Vedanta's recent annual report stated that its UK-based promoter, Vedanta Resources, plans to reduce its debt by $3 billion over the next three years. Vedanta Resources' debt stands at $6 billion as of fiscal year 2024.

Rating Upgrade

On July 25, global rating agency S&P upgraded Vedanta Resources' credit rating to B- from CCC+, citing improved capital structure and liquidity.

"We believe Vedanta Resources Ltd. has sufficient internal resources to meet debt maturities until December 2025 following recent funds raised and improved dividend capacity at its subsidiaries," according to a report issued by the agency. It further stated that debt reduction at Vedanta Resources is gradually making the company's capital structure more sustainable.

"We expect that Vedanta Resources' debt might fall by another $1 billion to around $4.5 billion over the next year. This is based on our predictions of Vedanta Ltd.'s possible dividends and brand fees throughout this time period. As a result, we expect interest expenses at the Vedanta Resources level to fall to $550-$600 million by the end of fiscal 2025 (ending March 31, 2025)," S&P added.

However, the rating agency emphasized that the refinancing of $1.2 billion in debt due in April 2026 remains the key credit concern. This comprises $600 million from both a private credit facility and a bond offering. "The refinancing of the April 2026 bond issue must be completed by December 2025." If that fails, the company's $2.4 billion in January 2027 and December 2028 bonds will mature on April 20, 2026. This could cause a liquidity squeeze," the rating agency stated.