Vedanta’s Bond Rating Draws Fire as Viceroy Alleges RBI Referral to ED

Moneylife Digital Team 29 September 2025

Economy & Nation

On 29 September 2025, Moody’s Investors Service assigned a B2 rating to Vedanta Resources Limited’s proposed US dollar bond issue, saying proceeds would be used to refinance a US$550mn (million) private credit facility due in April 2026. The agency described the outlook as stable, pointing to reduced holding-company debt —from US$9.1bn (billion) in March 2022 to US$4.8bn by June 2025 — and forecasting that lower funding costs would lift interest coverage to about 2.5 times by fiscal 2027. Moody’s said it expected dividends and brand fees from Vedanta’s operating subsidiaries to be sufficient to cover interest and maturities at the parent company through September 2026.

But the same day, investigative financial research firm Viceroy Research issued an alert claiming that the Reserve Bank of India (RBI) had referred the Vedanta group to the enforcement directorate (ED) under the Foreign Exchange Management Act (FEMA). Viceroy said it received confirmation of the referral on 23rd September and submitted evidence to ED two days later, including whistleblower testimony and materials it also shared with the Singapore Police Force. The allegations, if correct, raise significant questions about regulatory risk and disclosure at a time when Vedanta is seeking fresh funding from global investors.

According to Viceroy, Vedanta has used brand fees and dividends to unlawfully expatriate funds, evade taxes and conceal related-party dealings, and it failed to disclose an order requiring a US$123mn brand-fee rebate in fiscal 2024. The group further alleges that Vedanta concealed the RBI’s referral to the ED from bondholders and regulators, amounting to what it calls “material undisclosed regulatory risk.” Viceroy also questions the consistency of Vedanta’s financing story, pointing to media reports in July 2025 that the company had secured a US$60mn loan and US$380mn in commitments, with another US$220mn to be finalised. If those funds were raised to address the same private credit facility, Viceroy argues, why is the company again seeking US$750mn through new bonds to refinance it? Moody’s made no mention of this discrepancy, instead presenting the transaction as a straightforward liability-management exercise.

The allegations cut to the heart of Moody’s assumptions. The rating presumes uninterrupted upstreaming of cash from subsidiaries to the parent. Yet, Viceroy maintains that an ED investigation could result in asset or bank-account freezes and restrictions on cross-border remittances, as seen in the 2022 Xiaomi case where the agency seized more than US$700mn over alleged royalty payment violations. In that instance, courts upheld the ED’s freeze and required guarantees before releasing funds. Similar measures against Vedanta would directly undermine its liquidity model.

This is not the first time Viceroy has targeted Vedanta. In July, it released an 87-page report titled “Limited Resources,” alleging that the group operates a “Ponzi-like” structure dependent on constant refinancing and cash extraction from its publicly traded Indian units. Moneylife covered that report, which accused Vedanta of treating minority investors in Vedanta Ltd and Hindustan Zinc as a funding source for the London parent (Read: Viceroy on Vedanta: Forensic Bombshell Meets Deafening Regulatory Silence). In September, Viceroy followed with a report on Vedanta’s aluminium expansion strategy, warning of overstated profitability and execution risks (Read: Viceroy Research Slams Vedanta’s Bauxite Strategy, Warns of Profitability Risks and Timeline Failures). Moneylife also reported on allegations that Vedanta’s ESL unit was bleeding cash and could be pushed back toward insolvency (Read: Vedanta’s ESL Unit 'Bleeding Cash, Heading Back to Insolvency': Viceroy Research Warns).

So far, ED and RBI have not issued public statements and Moody’s rating action does not immediately say whether it had knowledge of the referral at the time. Viceroy, for its part, acknowledges in a legal disclaimer that its report represents opinion based on public information and its own analysis and it has invited whistle-blowers to come forward with further information.

Comments

User

parimalshah1

9 months ago

Lijke RaGa, this Viceroy research too keeps alleging without any proof whatsoever. Welcome to the world of so-called financial research that is a fake narrative. If you cannot compete with it malign it seems to be the motto.

rhsharpehead1980

9 months ago

Cash is being drained for subsidiaries. The assumption of uninterrupted upstreaming of cash from subsidiaries will not hold at all since ED has the power to freeze their assets. Ratings will collapse once enforcement comes in.