Vedanta, the mining and metals player, has increased the coupon rate on non-convertible debentures issued by it in August 2015 to 9.70%. In a filing, the company said the coupon on the bonds, which mature in 2020, has been raised by 25 basis points. The higher coupon follows a rating downgrade by Crisil from AA (Stable) to AA- (outlook negative), the company said.
The new coupon rate of 9.7% will be effective from January 27, the filing said. Depository data show Vedanta had raised Rs 2,000 crore via five-year bonds in August 2015 at a coupon rate of 9.45%.
Axis Trustee Services in a letter dated March 31 had intimated Vedanta about an email from State Bank of India (SBI) “informing coupon reset due to downward revision in rating as per terms of issuance”.
“Accordingly, we request you to kindly consider the contents of such communication and adhere to such covenants,” the letter from Axis Trustee Services said.
In late January, ratings agency Crisil had downgraded its ratings on the long-term debt instruments of Vedanta to Crisil AA-/Negative from Crisil AA/Stable.
Crisil said the rating downgrade reflects its belief that Vedanta’s consolidated earnings before interest, tax, depreciation, and amortisation will be lower than expected because of weak commodity prices and slow ramp up of aluminium smelters and power projects.
“While company has undertaken significant cost efficiency measures to partly offset the impact, Crisil believes that Vedanta’s cash flows will moderate over the medium term,” it had stated.
On Friday, the Vedanta share closed up 1.86% at Rs 87.45 on the BSE.