Vedanta's bond offer serves test of investor appetite for Indian junk debt

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 amortising 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, which plans to delist its Indian unit Vedanta Ltd. The proceeds of the offering will be used to partially fund the privatisation. 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 privatisation with a loan.

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.

Barclays Plc, Credit Suisse, Deutsche Bank AG, JPMorgan and Standard Chartered Plc are joint global coordinators and bookrunners for the deal.