Mumbai: Metals magnate Anil Agarwal’s VedantaNSE -0.94 % Resources, which has interests in industries as diverse as nonferrous metals, iron ore and crude oil, is set to raise up to $1 billion from overseas investors in one of the biggest offshore bond deals this year.
The resources conglomerate is likely to open the issue for subscription in the next few weeks to refinance a part of its existing debt. It may also utilise a part of the proceeds as working capital, three people with direct knowledge of the development told ET.
The company will meet potential investors in New York, Boston, London, Singapore, and Hong Kong this week.
“Vedanta is planning to issue a benchmark size US dollarNSE -0.16 % bond. The company proposes to use the bond proceeds primarily for refinancing its debt,” said a spokesperson.
Moody’s rates proposed sale B2
The US investors can also invest in these securities, called 144A in market parlance. The bonds are likely to be of fiveyear maturity.
Global investment banks, including Credit Suisse, JP Morgan, and Standard Chartered, are helping the company raise the money. Vedanta Resources Finance Plc, a wholly-owned subsidiary of the Londonbased company, will issue the bonds.
Vedanta Resources will offer an irrevocable guarantee to the bond buyers, who will buy the proposed debt papers issued in the name of the subsidiary, said one of the industry executives cited above.
Moody’s rated the proposed sale B2, or five notches below the investment grade. Standard and Poor’s is expected to rate the bonds B+.
Vedanta is a frequent issuer in the overseas market and it successfully completed two bond transactions of $1 billion each in 2017 as part of its proactive liability management strategy, the company spokesperson said.
The tranche launched in September, 2017, offered 6.125 per cent, data compiled by the ETIG Database show. Those bonds will mature in 2024. The group sold dollar bonds worth around $3.4 billion between 2011 and 2017.
Last week, GMR Hyderabad International Airport Limited, a GMR group company, raised $300 million via bonds sold to offshore investors. They were priced at 5.375 per cent, which was on the higher side of the initial guidance.
The pricing of the Vedanta bonds is expected to be in the range of 5-5.30 per cent, said a dealer.
“Still, the funding cost is relatively low compared with six months ago. That is why corporates are planning to tap the international market, especially when the cost of currency covers has come off,” said an investment banker who had struggled to secure deals last year.
As US Treasury yields head south, many Indian companies are tapping overseas credit lines.
Source: economictimes.indiatimes.com