Vedanta Limited's latest non-convertible debenture (NCD) issuance faced tepid demand, forcing the non-ferrous metals company to scale down its fundraising from an initial ₹3,500 crore to ₹2,600 crore. Despite offering headline yields of 9.40% and 9.50%, Vedanta unofficially agreed to pay investors an additional 25 basis points, effectively pushing the real cost to 9.65% and 9.75%.
Citibank had the mandate for the NCD raise.
«The company wanted to maintain the optics of a lower coupon, so it opted to pay investors separately rather than printing a higher yield in the market,» a source familiar with the development said.
Another source said that the key factor behind the weak response was the absence of Citibank from the rupee bond market for years, with this trade marking its rare participation. However, Citibank's limited marketing efforts failed to generate strong demand, further forcing Vedanta to offer additional incentives to investors.
The company raised ₹2,600 crore through two series of unsecured NCDs, offering annual coupon rates of 9.40% and 9.50% largely to refinance debt and fund capital expenditure.
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