Vedanta has raised ₹2,575cr via bond sale
What's the story
Vedanta Limited has raised ₹2,575 crore through a three-year bond sale. The bonds were sold at a coupon rate of around 8.95%. The move is mainly aimed at refinancing its existing debt and meeting upcoming maturity obligations. Barclays and Citigroup arranged the issue, which was placed with institutional investors such as mutual funds.
Pricing details
Vedanta's bond pricing affected by geopolitical factors
Initially, Vedanta planned to price the bonds at around 8.75% for a similar tenor. However, due to recent geopolitical developments and changes in government bond yields, spreads widened prompting a higher coupon rate. The transaction is structured as a three-year non-convertible debenture issuance with an option to raise over ₹2,000 crore if demand remains strong.
Debt strategy
High leverage and dividend outflows to VRL
Vedanta has been an active player in the domestic debt market, refinancing existing liabilities and managing upcoming maturities. The company's high leverage is mainly due to dividend outflows to its UK-based parent company, Vedanta Resources Limited (VRL). These payouts are used for servicing annual interest obligations of ₹5,000 crore-₹5,300 crore. A recent CRISIL report revealed that Vedanta's net leverage stood at a high 3.2 times as of March 2024, slightly lower than the previous year's figure of 3.4 times.