Adani bribery charge impact: Vedanta Resources defers dollar bond issue

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Billionaire Anil Aggarwal’s Vedanta Resources has deferred the company’s $1.2 billion bond issuance following volatility in the market after US justice department, in a report, charged Gautam Adani and others with $250 million bribery. The Vedanta dollar bond issue was to be priced on Thursday.

 

Vedanta Resources had calls with fixed-income investors this week to market its dollar bond issuance to refinance its outstanding notes due in 2028.

 

Following the US justice department setback, Adani Green Energy, the renewable energy arm of the Adani group, scrapped a $600 million bond issue. The company had priced the 20-year bonds at 7.45 per cent and planned to use the proceeds for refinancing its existing loan facilities.

 

Dollar bonds of the Adani group slid on Thursday following the move by the US justice department. There is caution in the market and investors are being a bit cautious towards Indian issuers, said a source, who did not want to be quoted.

 

Bankers said that while there may be some short-term implications for Indian companies seeking overseas funds, as seen with Vedanta Resources, India Inc. will likely continue to tap the dollar bond market in the long run, given the strong demand for high-yield papers.

 

“Foreign Portfolio Investors (FPIs) assess each entity on its individual merits, driven by India’s consistent economic growth and stable macroeconomic indicators. While initial market reactions may cause temporary turbulence for Indian corporates tapping offshore markets, I anticipate that Indian companies will continue securing offshore borrowings at competitive rates, reaffirming global confidence in their strong financial fundamentals”, said Venkatakrishnan Srinivasan, founder & managing partner, Rockfort Fincap LLP.

 

“That said, corporate entities may prefer to wait briefly to ensure they can proceed with borrowings under optimal conditions once the situation stabilises”, he added.

 

So far in FY25 (up to October), Indian corporates have raised around Rs 35,000 crore from overseas investors through bonds. Some of the major issuers included Manappuram Finance, Samvardhana Motherson International, Piramal Capital, and REC Ltd. In FY24, domestic companies had raised a little over Rs 45,000 crore from overseas investors, with major issuers being State Bank of India, HDFC Bank, Adani Green Energy, and IRB Infrastructure, according to data from Primedatabase.

 

With interest rates softening, lower hedging costs, and a growing appetite for high-yield paper, Indian companies stepped up activity in the overseas bond market. Recently, SBI raised $500 million via five-year bonds from international investors through its London branch at a very fine pricing. The bonds were priced 82 basis points (bps) above the US Treasury. The initial pricing guidance for the issuance was 115 bps over the US Treasury but the state-owned lender managed to compress the pricing and the final pricing guidance came in at T+ 82 bps, managing a compression of 33 bps. One basis point is one-hundredth of a percentage point.

 

Vedanta did not respond to an email seeking a comment on the issue.