Vedanta seeking to raise Rs4,809 crore through bond issuance to LIC; stock slips ~1%

29 Jun 2022 , 10:52 AM

Vedanta Limited, a mining major, has locked a direct deal with the Life Insurance Corporation of India (LIC) to raise Rs 4,809 crore through its 10-year bonds.

“It’s a structured transaction with LIC that Vedanta is doing. The company has AA rating bonds. It is a ten-year paper. It’s a direct trade with non-coupon bidding and is open bidding,” a senior Treasury official explained.

“Pricing is at 10-year G-sec plus 100 basis points – probably around 8.50%,” the source said.

While the specifics of such structured transactions are not made public, the size of the transaction suggested the involvement of LIC, according to multiple sources.

The mining conglomerate is also looking to raise around Rs1,800 crore to Rs2,000 crore through the sale of 18-month papers, though sources did not name the investors who are likely to participate in this fundraising.

According to the sources, while the 10-year bond transaction had been completed, negotiations for the 18-month bonds are still ongoing.

Vedanta intends to use the proceeds to prepay or repay existing debt as well as for capital expenditures. Vedanta last raised funds through local currency bonds in December 2021. Rating agencies such as CRISIL and India Ratings upgraded Vedanta’s rating to AA earlier this year.

At around 10.56 AM, Vedanta was trading at Rs233 down by Rs1.9 or 0.81% from its previous closing of Rs234.90 on the BSE.  LIC’s counter was trading near its lowest levels, and was seen at Rs660.50 on BSE.