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.

High Yield Experts

Senior Credit Analyst, Lucror Analytics

Trung Nguyen

Senior Credit Analyst

Credit

We view Vedanta Resources (VRL) as "High Risk" on the LARA scale, mainly due to the difficulty in upstreaming cash to service debt at the holdco level (which could improve after Vedanta Ltd's privatisation and the removal of the Dividend Distribution Tax in FY 2020-21) and volatility in commodity prices. The company's fundamental profile is supported by: [1] a large and diversified resource asset base; [2] production efficiency, with sound earnings and cash-flow capabilities, albeit segmental contributions fluctuate from year to year; and [3] sound liquidity. Conversely, VRL's risk profile is affected by: [1] the complex corporate structure, with related-party transactions; [2] regulatory risk (especially in the aluminium and iron ore segments); and [3] the inherent volatility of commodity prices. The company has grown rapidly in the past, with assets tripling from 2009 to 2012 alongside a softening in the financial risk profile. We view this as a weakness, given the operational challenges inherent for such a diverse group. VRL (issuer of the bonds) is a holding company. Its main assets include 63% of Vedanta Ltd (formerly Sesa Sterlite, the holding company for most of its activities) and 79% of Konkola Copper Mines (nationalised by the Zambian government, though Vedanta has since approached the courts to overturn this decision). Holdco creditors are highly dependent on a continued stream of dividends or intercompany loans from these interests. Our fundamental Credit Bias on VRL is "Negative", due to: [1] the volatile operating environment; [2] the evolving regulatory environment, as reflected by the loss of Konkola Copper Mines, as well as the suspension of the Tuticorin smelter and Goa mine; [3] our belief that the delisting of subsidiaries will result in weaker transparency/regulatory oversight; and [4] the Chairman's apparent appetite for M&A. We view VRL as "Weak" on the LAGA scale, mainly driven by the likelihood of the company or its subsidiaries being used to support the debt of parent Volcan Investments.

  We view Vedanta Resources (VRL) as "High Risk" on the LARA scale, mainly due to the difficulty in upstreaming cash to service debt at the holdco level (which could improve after Vedanta Ltd's privatisation and the removal of the Dividend Distribution Tax in FY 2020-21) and volatility in commodity prices. The company's fundamental profile is supported by: [1] a large and diversified resource asset base; [2] production efficiency, with sound earnings and cash-flow capabilities, albeit segmental contributions fluctuate from year to year; and [3] sound liquidity. Conversely, VRL's risk profile is affected by: [1] the complex corporate structure, with related-party transactions; [2] regulatory risk (especially in the aluminium and iron ore segments); and [3] the inherent volatility of commodity prices.   The company has grown rapidly in the past, with assets tripling from 2009 to 2012 alongside a softening in the financial risk profile. We view this as a weakness, given the operational challenges inherent for such a diverse group. VRL (issuer of the bonds) is a holding company. Its main assets include 63% of Vedanta Ltd (formerly Sesa Sterlite, the holding company for most of its activities) and 79% of Konkola Copper Mines (nationalised by the Zambian government, though Vedanta has since approached the courts to overturn this decision). Holdco creditors are highly dependent on a continued stream of dividends or intercompany loans from these interests.   Our fundamental Credit Bias on VRL is "Negative", due to: [1] the volatile operating environment; [2] the evolving regulatory environment, as reflected by the loss of Konkola Copper Mines, as well as the suspension of the Tuticorin smelter and Goa mine; [3] our belief that the delisting of subsidiaries will result in weaker transparency/regulatory oversight; and [4] the Chairman's apparent appetite for M&A.   We view VRL as "Weak" on the LAGA scale, mainly driven by the likelihood of the company or its subsidiaries being used to support the debt of parent Volcan Investments. 

Vedanta Resources - Tear Sheet - Lucror Analytics