Billionaire Agarwal’s Vedanta Tests India Junk Bond Demand
Billionaire Anil Agarwal’s Vedanta markets a dollar bond in a crucial test of investor appetite for Indian junk debt.
(Bloomberg) -- Billionaire Anil Agarwal’s Vedanta Resources is marketing a dollar bond in a crucial test of investor appetite for Indian junk debt.
The commodities giant is offering a three-year amortizing note with an initial price guidance of around 13.25%, according to a person familiar with the matter.
The fundraising is critical for Vedanta Resources, whose plans to delist its Indian unit Vedanta Ltd. still face hurdles including getting stock exchange approvals. The proceeds of the offering will be used to partially fund the privatization. Any surplus money will go toward a tender offer of Vedanta Resources 2021 dollar bonds or repayment of the securities at maturity, the person familiar said.
S&P Global Ratings said last week that if the privatization goes through, Vedanta Resources’ credit rating is set to be upgraded, and any failure would mean immediate downgrade pressure. Vedanta Resources also plans to fund the privatization with a loan.
According to a preliminary offering circular dated Aug. 11, Vedanta Resources has received commitments from lenders for up to $1.75 billion. That can be drawn through a three-month bridge facility or a bank guarantee and the terms are subject to change.
The commodity giant’s bonds have staged a stunning comeback since slumping to distressed levels in March, and according to UBS Group AG, the securities have priced in a successful delisting of its unit. If completed, the privatization will make Vedanta Resources’ organizational structure cleaner and give the company better access to cash.
Read about: SoftBank-Backed Renewable Energy Firm Postpones Dollar Bond
While there have been some signs of credit strains easing recently, riskier Indian borrowers have faced push-back from investors as the country grapples with a slowing economy after the world’s biggest lockdown amid the pandemic. A SoftBank Group Corp.-backed renewable energy company postponed a dollar bond in July.
The last Indian high-yield dollar bond was sold by Lodha Developers in March, according to Bloomberg-compiled data.
Under the terms of the notes, the issuer is required to redeem the bonds if it decides not to complete the privatization or stock exchange approval is not received by 45 days after the settlement day.
Barclays Plc, Credit Suisse, Deutsche Bank AG, JPMorgan and Standard Chartered Plc are joint global coordinators and bookrunners for the deal.
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