Mining giant Vedanta Ltd may have struck a deal with Life Insurance Corporation (LIC) to raise Rs 4,809 crore through 10-year bonds, according to a media report, adding the move comes as higher US interest rates have made it expensive for Indian companies to tap foreign bond markets. Vedanta also plans to raise about Rs 1,800-Rs 2,000 crore by selling papers for 18 months.
“It is a structured transaction with LIC that they (Vedanta) are doing. They (Vedanta) have an AA rating. It’s a 10-year-old newspaper. It is a direct trade with no coupon bidding; it is open bidding. The price is somewhere around 10-year G-sec plus 100 basis points — probably around 8.50 percent,” the Business Standard report was quoted as saying by a senior treasury official.
According to the report, 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 expenditures. The company raised money through local currency bonds in December 2021. Rating agencies, including Crisil and India Ratings, upgraded Vedanta’s rating to AA earlier this year, the company said. In February 2021, Vedanta raised $1.2 billion through offshore bonds.
According to a Bloomberg report, Vedanta Resources and Tata Motors’ dollar-denominated debt maturing in 2024 suffered its biggest drop ever last week as the rupee weakened to an all-time low. Adani Green Energy’s foreign currency bonds suffered their biggest decline since March, while GMR Hyderabad’s securities also fell in 2026.
“The tailwind that has helped Indian borrowers tap offshore markets at lower cost and easy access over the past two years has been reversed. Rates in advanced economies have risen significantly, especially at the shorter end of the curve. The shorter end of the curve is largely linked to floating rate loans in offshore markets. In addition, the weak rupee has worsened arithmetic,” the BS report quoted India Ratings and research director Soumyajit Niyogi as saying.
Earlier this month, Vedanta had said that a board committee has agreed to raise Rs 4,089 crore through private placement bonds. “An authorized committee of directors considered and approved the tender offer at its meeting today, June 4, 2022… each summed up to Rs 4,089 crore,” the company said in an application to the BSE.
Earlier this year, Vedanta last week also raised Rs 1,000 crore from IDBI Bank and Canara Bank for three years at 7.68 percent to repay existing debt and for general corporate purposes. Of the Rs 1,000 crore raised in the form of covered bonds maturing on December 31, 2024, both banks subscribed Rs 500 crore each.
Vedanta is a globally diversified natural resources company with interests in zinc, lead, silver, iron ore, steel, copper, aluminum, energy, oil and gas.
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