Mining major Vedanta Ltd might have struck a deal with Life Insurance Corporation (LIC) to raise Rs 4,809 crore through 10-year bonds, according to a media report, which added that the move comes when higher US interest rates have made it expensive for Indian firms to tap foreign bond markets. Vedanta is also looking to raise around Rs 1,800-Rs 2,000 crore through the sale of 18-month papers.
“It’s a structured transaction with LIC which they (Vedanta) are doing. They (Vedanta) are AA-rated. It’s a 10-year paper. It’s a direct trade with non-coupon bidding; it is open bidding. The pricing is somewhere around 10-year G-sec plus 100 basis points – likely around 8.50 per cent,” the Business Standard report quoted a senior treasury official as saying.
The report said the size of the deal suggested the involvement of LIC, while the details of such structured transactions are not made public.
The proceeds will be used by Vedanta to prepay or repay existing debt and for capital spending. The company mopped up funds through local currency bonds in December 2021. Rating agencies, including Crisil and India Ratings, upgraded Vedanta’s rating to AA earlier this year, it said. In February 2021, Vedanta raised $1.2 billion through offshore bonds.
According to a Bloomberg report, the dollar-denominated debt of Vedanta Resources and Tata Motors maturing in 2024 suffered their biggest drop on record last week as the rupee weakened to all-time lows. Foreign currency bonds of Adani Green Energy suffered their biggest fall since March, while GMR Hyderabad’s 2026 securities also fell.
“The tailwinds which had helped Indian borrowers to tap offshore markets at a cheaper cost and easy access in the last two years have reversed. The rates in advanced economies have gone up significantly, especially at the shorter end of the curve. The shorter end of the curve is largely linked to floating rate borrowing from offshore markets. In addition to that, the weak rupee has worsened the arithmetic,” the BS report quoted India Ratings and Research Director Soumyajit Niyogi as saying.
Earlier this month, Vedanta had said a committee of directors has approved raising up to Rs 4,089 crore via debentures on a private placement basis. “An authorised committee of directors at its meeting held today i.e. June 4, 2022, considered and approved offering for subscription… up to 40,890 nos secured, rated, listed, redeemable, non-convertible debentures (NCDs) of face value Rs 10,00,000 each aggregating up to Rs 4,089 crore,” the company said in a filing to the BSE.
Earlier this year, Vedanta also raised Rs 1,000 crore from IDBI Bank and Canara Bank last week for three years at 7.68 per cent to repay existing debt and for general corporate purpose. Of the Rs 1,000 crore that were raised in the form of secured bonds maturing 31 December 2024, both banks subscribed to Rs 500 crore each.
Vedanta is a globally diversified natural resources company with interests in zinc, lead, silver, iron ore, steel, copper, aluminium, power, oil and gas.
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