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Vedanta predicts record rupee bond as Agarwal strengthens finances

Vedanta Ltd. Billionaire Anil Agarwal prepares its biggest rupee bond sale, as India’s largest zinc and aluminum producer seeks to raise funds for capital expenditure.

The company is seeking commitments on Tuesday for as much as 48.09 billion rupees ($614 million) worth of 10-year notes, according to people familiar with the matter. Vedanta plans to use the proceeds to prepay or pay down existing debt and for capital expenditures, according to a memo seen by Bloomberg.

Vedanta last tapped the local currency bond market in December and is bolstering its funds as the Indian government plans to sell its stake in Hindustan Zinc Ltd soon. Agarwal’s Vedanta owns around 65% of the Udaipur-based company and the tycoon has sought over the years to tighten his grip on the cash-rich zinc producer and buy the remaining share from the government.

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Vedanta is returning to the bond market after its ratings were upgraded to AA by Crisil and India Ratings & Research earlier this year. Even though the average 10-year AA rupee corporate bond yield rose 53 basis points this quarter to 8.48%, analysts expect borrowing costs to rise further in the coming months as the Reserve Bank of India raises rates further to contain inflation.

Vedanta did not immediately respond to emailed questions about its fundraising plans.

Last week, 2024 dollar bonds of Vedanta’s parent company, Vedanta Resources Ltd, suffered the biggest drop on record as falling metal prices heightened worries about the resource giant’s financial health.

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