Metals magnate Anil Agarwal’s Vedanta Resources would raise up to $1 billion in dollar bonds in the second such issue in six months, harnessing global liquidity to pare high-cost debt and build an expansion kitty ahead of the mining cycle turnaround. The sale is likely as early as next week, three people with direct knowledge of the exercise told ET.
Bankers from Barclays, J.P. Morgan, HSBC and Credit Suisse, and the London-based Vedanta are conducting investor road-shows in North America, Europe, Middle East and Asia. Bonds in the latest series would be due for redemption in either seven or 10 years. “Bankers are now in talks with different global investors to gauge the market appetite. Vedanta has always been the favourite for investors, as it is an investment-grade corporate,” said one of the sources cited above.
An e-mail sent to Vedanta seeking its comments on the bond sale remained unanswered until the publication of this report. Independent bankers were not available for comment.
In January this year, Vedanta Resources raise $1 billion by selling bonds to refinance its near-term debt obligations. The bonds were sold at a coupon of 6.375 per cent, with a five-year maturity. The company used the proceeds to buy back two series of earlier bonds maturing in 2018 and 2019. The old series offered 9.5 per cent and 6 per cent, respectively.
When Vedanta raised $1 billion six months ago, the 10-year benchmark US paper yielded at around 2.50 per cent, compared with 2.30 per cent now. Against the dollar, the rupee has strengthened in the period to 64.36 from 68.07.
Moody’s has rated Vedanta Resources as B3, the lowest in the investment grade. It does not anticipate downward rating pressure over the next 12-18 months, given the stable outlook, it said in a release a few months ago.
To be sure, Moody’s cautioned that the rating grade could come under negative pressure if commodity prices decline, eating into Vedanta’s margins.
Vedanta Ltd, the domestic unit of the diversified conglomerate, reported Tuesday that its quarterly consolidated profit doubled, paced by higher zinc prices that helped the company improve its margins. Consolidated profit was at Rs 1,525 crore in the quarter ended June 30, with contributions from the Indian zinc division rising three-fold to Rs 1,815 crore.
However, losses stemming from the company’s power and iron-ore operations crimped the increasing profits from zinc. The company owns zinc mines in Rajasthan, and its output jumped 84 per cent to 233,000 tonnes in April-June quarter.
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