Senior Credit Analyst, Lucror Analytics

Trung Nguyen

Senior Credit Analyst

High Yield Experts

Lucror Analytics

Lucror Analytics is a leading credit and ESG research specialist and a provider of technology solutions for differentiated fixed income strategies. Our roots are in bottom-up fundamental credit analysis with a specialization in high yield corporate credits from Europe, Asia and Latin America. We are one of few research specialists integrating ESG considerations with fundamental credit research through a dedicated ESG platform. Our ESG assessment covers five key criteria: Disclosure, E,S, & G Pillars, Controversies, ESG Impact on Credit and ESG Momentum.

Recognizing the importance and value-add of Factor Investing in fixed income, Lucror developed the Smart Quant Navigator (SQN), an intuitive platform that helps clients devise and implement factor-based strategies ranging from pure quant to active fundamental, with integrated ESG.

Our company has been at the forefront of developments in the fixed income markets, identifying opportunities and consistently delivering new products and value-adding solutions to clients. Lucror has close relationships with the largest and most reputable asset managers, family offices, hedge funds, investment and wealth managers globally.

Credit

We do not view the group's failure to take Vedanta Limited private as negatively as the rating agencies, since taking out the minority shareholders to avoid cash leakage would have required a material increase in net debt. As expected, Hindustan Zinc paid a large dividend, signalling support for the holdco. We think the group will speed up cash upstreaming, and view the risk of a debt restructuring in the next 12 months as low.  We move our recommendation back to “Speculative Buy” from “Hold” following the dividend from Hindustan Zinc, which indicates the company’s willingness to upstream cash to service the holdco’s debt. In our opinion, Vedanta made the right choice by enduring the cash leakage rather than risking another default or debt restructuring in the near term. The VEDLN curve is again trading at distressed levels following the failure of the de-listing. We continue to think the risk/reward ratio is favourable.

  We do not view the group's failure to take Vedanta Limited private as negatively as the rating agencies, since taking out the minority shareholders to avoid cash leakage would have required a material increase in net debt. As expected, Hindustan Zinc paid a large dividend, signalling support for the holdco. We think the group will speed up cash upstreaming, and view the risk of a debt restructuring in the next 12 months as low.    We move our recommendation back to “Speculative Buy” from “Hold” following the dividend from Hindustan Zinc, which indicates the company’s willingness to upstream cash to service the holdco’s debt. In our opinion, Vedanta made the right choice by enduring the cash leakage rather than risking another default or debt restructuring in the near term. The VEDLN curve is again trading at distressed levels following the failure of the de-listing. We continue to think the risk/reward ratio is favourable. 

Vedanta Resources - Event Flash - HZL USD 1.2 Bn Dividend - Lucror Analytics

Leonard Law, CFA

Lucror Analytics Morning Views comprise our fundamental credit analysis, opinions and trade recommendations on high yield issuers in the region, based on key company-specific developments in the past 24 hours. Our Morning Views include a section with a brief market commentary, key market indicators and a macroeconomic and corporate event calendar.<ul><li><a href='#lucror-entity-2312'>Alam Sutera Realty</a></li><li><a href='#lucror-entity-18387'>CIFI Holdings</a></li><li><a href='#lucror-entity-22202'>Vedanta Resources</a></li></ul>

Lucror Analytics Morning Views comprise our fundamental credit analysis, opinions and trade recommendations on high yield issuers in the region, based on key company-specific developments in the past 24 hours. Our Morning Views include a section with a brief market commentary, key market indicators and a macroeconomic and corporate event calendar.Alam Sutera RealtyCIFI HoldingsVedanta Resources

Morning Views Asia: Alam Sutera Realty, CIFI Holdings, Vedanta Resources

Vedanta Resources' attempt to delist Vedanta Ltd (VEDL) has likely failed, and we expect VEDL’s share price and Notes to come under pressure in the near term. We believe the group will attempt to negotiate with Noteholders to waive the Special Mandatory Redemption clause and avoid a full restructuring of all the Notes. The company would have to pay USD 1.442 bn if the clause were to be exercised. The proceeds from the issuance have been placed in a escrow account for the take-private transaction. Thus, c. USD 1.4 bn should still be available. However, cash at the VRL level is typically very low, and could be insufficient to cover the c. USD 40 mn difference. The rating agencies would likely view the potential debt restructuring (even if the Special Mandatory Redemption is waived) very negatively and as similar to a distressed debt restructuring. We move our recommendation on the VEDLN curve to “Hold” from “Speculative Buy”.

  Vedanta Resources' attempt to delist Vedanta Ltd (VEDL) has likely failed, and we expect VEDL’s share price and Notes to come under pressure in the near term.   We believe the group will attempt to negotiate with Noteholders to waive the Special Mandatory Redemption clause and avoid a full restructuring of all the Notes. The company would have to pay USD 1.442 bn if the clause were to be exercised. The proceeds from the issuance have been placed in a escrow account for the take-private transaction. Thus, c. USD 1.4 bn should still be available. However, cash at the VRL level is typically very low, and could be insufficient to cover the c. USD 40 mn difference.   The rating agencies would likely view the potential debt restructuring (even if the Special Mandatory Redemption is waived) very negatively and as similar to a distressed debt restructuring.   We move our recommendation on the VEDLN curve to “Hold” from “Speculative Buy”. 

Vedanta Resources - Event Flash - Delisting Offer For Vedanta Ltd Fails - Lucror Analytics

Lucror Analytics Morning Views comprise our fundamental credit analysis, opinions and trade recommendations on high yield issuers in the region, based on key company-specific developments in the past 24 hours. Our Morning Views include a section with a brief market commentary, key market indicators and a macroeconomic and corporate event calendar.<ul><li><a href='#lucror-entity-2312'>Alam Sutera Realty</a></li><li><a href='#lucror-entity-13022'>Anton Oilfield</a></li><li><a href='#lucror-entity-6159'>China SCE</a></li><li><a href='#lucror-entity-227'>Guangzhou R&F Properties</a></li><li><a href='#lucror-entity-18561'>JSW Steel Ltd</a></li><li><a href='#lucror-entity-20844'>Medco Energi</a></li><li><a href='#lucror-entity-28672'>Powerlong Commercial Management Holdings</a></li><li><a href='#lucror-entity-8898'>Sino Ocean Land</a></li><li><a href='#lucror-entity-22202'>Vedanta Resources</a></li><li><a href='#lucror-entity-5519'>Suzhou Boamax Tech Group</a></li></ul>

Lucror Analytics Morning Views comprise our fundamental credit analysis, opinions and trade recommendations on high yield issuers in the region, based on key company-specific developments in the past 24 hours. Our Morning Views include a section with a brief market commentary, key market indicators and a macroeconomic and corporate event calendar.Alam Sutera RealtyAnton OilfieldChina SCEGuangzhou R&F PropertiesJSW Steel LtdMedco EnergiPowerlong Commercial Management HoldingsSino Ocean LandVedanta ResourcesSuzhou Boamax Tech Group

Morning Views Asia: Alam Sutera Realty, Anton Oilfield, China SCE, Guangzhou R&F Properties

Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Event-Driven

Late last evening, <a href="https://www.smartkarma.com/entities/vedanta-ltd" target="_blank" data-smartkarma-citation="entities:514:1" rel="noopener">Vedanta Ltd (VEDL IN)</a> in an <a href="https://www.bseindia.com/xml-data/corpfiling/AttachLive/172a3c4a-d43e-455e-ab32-24995981d75b.pdf" target="_blank" rel="noopener">announcement</a> to the Stock Exchanges said that its promoter <a href="https://www.smartkarma.com/entities/vedanta-resources-limited" target="_blank" data-smartkarma-citation="entities:22202:1" rel="noopener">Vedanta Resources (VED LN)</a> had informed them that the Delisting Offer was deemed to have failed.With just over 1.34bn shares needing to be tendered in the Reverse Book Building (RBB) process for the Promoters to reach a 90% shareholding, there were almost 1.378bn shares tendered. However, the number of confirmed shares was only 1.255bn which meant that the 90% threshold was not reached.With the delisting having failed, shares that were tendered in the RBB process need to be returned within 10 working days. The stock will come under pressure on Monday with a final selloff once the locked up shares are released. With the futures in ban period, it is extremely difficult for investors to hedge their position.The ADR <a href="https://www.smartkarma.com/entities/sesa-sterlite-ltd-adr" target="_blank" data-smartkarma-citation="entities:10972:1" rel="noopener">Vedanta Ltd (VEDL US)</a> had closed 7.74% lower on Friday, implying a local price of INR 109/share versus a close of INR 121.85/share on <a href="https://www.smartkarma.com/entities/vedanta-ltd" target="_blank" data-smartkarma-citation="entities:514:1" rel="noopener">Vedanta Ltd (VEDL IN)</a> on Friday.In his Insight, we look at the numbers from the RBB process and try to figure out why the Delisting failed and what it could mean for the stock and <a href="https://www.smartkarma.com/entities/vedanta-resources-limited" target="_blank" data-smartkarma-citation="entities:22202:1" rel="noopener">Vedanta Resources (VED LN)</a> going forward.

Late last evening, Vedanta Ltd (VEDL IN) in an announcement to the Stock Exchanges said that its promoter Vedanta Resources (VED LN) had informed them that the Delisting Offer was deemed to have failed.With just over 1.34bn shares needing to be tendered in the Reverse Book Building (RBB) process for the Promoters to reach a 90% shareholding, there were almost 1.378bn shares tendered. However, the number of confirmed shares was only 1.255bn which meant that the 90% threshold was not reached.With the delisting having failed, shares that were tendered in the RBB process need to be returned within 10 working days. The stock will come under pressure on Monday with a final selloff once the locked up shares are released. With the futures in ban period, it is extremely difficult for investors to hedge their position.The ADR Vedanta Ltd (VEDL US) had closed 7.74% lower on Friday, implying a local price of INR 109/share versus a close of INR 121.85/share on Vedanta Ltd (VEDL IN) on Friday.In his Insight, we look at the numbers from the RBB process and try to figure out why the Delisting failed and what it could mean for the stock and Vedanta Resources (VED LN) going forward.

Vedanta (VEDL IN): A Failed Delisting Will Now Pressure The Stock

India

Vedanta Resources Limited operates as a diversified natural resource company. The Company extracts and process zinc, lead, aluminum, iron ore, copper, and silver, as well as focuses on oil and natural gas. Vedanta Resources serves clients worldwide.

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Vedanta Resources (VED LN)

Vedanta Resources - Event Flash - HZL USD 1.2 Bn Dividend - Lucror Analytics

We do not view the group's failure to take Vedanta Limited private as negatively as the rating agencies, since taking out the minority...

Lucror Analytics

Morning Views Asia: Alam Sutera Realty, CIFI Holdings, Vedanta Resources

Lucror Analytics Morning Views comprise our fundamental credit analysis, opinions and trade recommendations on high yield issuers in the region,...

Lucror Analytics

Vedanta Resources - Event Flash - Delisting Offer For Vedanta Ltd Fails - Lucror Analytics

Vedanta Resources' attempt to delist Vedanta Ltd (VEDL) has likely failed, and we expect VEDL’s share price and Notes to come under pressure in...

Lucror Analytics

Morning Views Asia: Alam Sutera Realty, Anton Oilfield, China SCE, Guangzhou R&F Properties

Lucror Analytics Morning Views comprise our fundamental credit analysis, opinions and trade recommendations on high yield issuers in the region,...

Lucror Analytics

Vedanta (VEDL IN): A Failed Delisting Will Now Pressure The Stock

With the Vedanta Delisting Offer having failed, we take a look at why it failed and what it could mean for the stock going forward.

Brian Freitas

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