Vedanta Holdco plans $1.5-billion notes issuance
Vedanta Resources plans to raise up to $1.5 billion in a five-year dollar denominated bond sale, marking the first such refinancing-focused global issuance since a January restructuring at the UK holding company of Vedanta Ltd.
Proceeds from the latest issue will be used to refinance $470 million in bonds that are due in 2027 and $1 billion due 2028. Both sets of bonds — carrying 13.87% interest rates — will now be redeemed on October 2 this year. “Vedanta Resources’ objective is to redeem the two bonds, which are trading on a par, with the new ones, which will be issued at 9.5-10.5%, bringing down the borrowing cost,” said a banker.
The five-year US treasury rate is currently at 3.7%. Typically, a 6-6.5% premium above the corresponding US treasury yield will take the coupon to about 10.5% at the upper range, a banker said.
Although the company has recently raised $500 million by selling a 2.6% stake in subsidiary Vedanta Ltd to improve liquidity, S&P Global Ratings has warned of stress. “Refinancing of $1.2 billion of debt due in April 2026 is the key factor from a credit perspective,” S&P said in July.
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“If that fails, the maturity of the company’s January 2027 and December 2028 bonds aggregating $2.4 billion could accelerate to April 2026 and this could precipitate liquidity stress,” said S&P.
The latest issuance will be led by Barclays, Citigroup, Deutsche Bank, JPMorgan Chase and Standard Chartered as global coordinators. Vedanta Resources Finance II Plc, a wholly
