Vedanta Resources, the London-listed resources and mining company, has cut the value of its bond repurchase programme to $227.4 million from the $500-million figure it had announced last week.

The buy-back which began on January 11 ended on January 18. It is set to be settled on Wednesday.

Distressed exchange

The repurchase, which took place via a Dutch auction, was an “opportunistic buyback” of the miner’s $1.134 billion of the convertible bonds maturing in July this year, said Moody’s in a note following the announcement last week.

The ratings agency said the offer, which accounted for around three per cent of the company’s total outstanding debt, did not impact the company’s Ba2 corporate family rating, and negative rating outlook.

The offer was unlikely to be treated as a “distressed exchange,” it said, adding that a distressed exchange could materialise “if the note holder losses exceed current expectations, estimated based on current market prices”.

“While Vedanta Resources has not stated any intention on further buybacks, additional discounted note repurchases may be treated as distressed exchange when viewed in combination with the current proposed transaction,” senior Moody’s analyst Kaustubh Chubai, wrote in an investor note.

Bonds that had been tendered at an offer price at or below the set purchase price ($91) had been accepted in full, the company said in a statement to the London Stock Exchange.

In November last year, Moody’s downgraded Vedanta Resource’s corporate family rating to BA2 from Ba1, and its senior unsecured ratings to B1 from Ba3, with a negative outlook for both, citing persistently weak commodity prices and narrowing premiums, that would keep the company’s operating performance weak.

A number of metals and mining companies have announced debt buybacks in recent months, including Fortescue Metals Group, and Indonesian miner Indika.

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