(Bloomberg) -- Vedanta Resources Ltd. is going ahead with its second dollar bond offering in two months, testing investor appetite for Indian offshore debt just days after the US indictment of Adani Group founder Gautam Adani.
A unit of Vedanta, a London-based mining company with most of its operations in India, is selling a callable note, according to people familiar with the matter who asked not to be identified. It’ll be in two parts, maturing in 3.5 and seven years, with initial price guidance set in the 10.375% and 11.375% areas, they said.
Vedanta, which is controlled by Indian billionaire Anil Agarwal, halted the sale last week amid market volatility, after the US charged Gautam Adani with helping drive a $250 million bribery scheme. Adani itself scrapped a dollar bond sale priced just that day.
The Adani Group has denied the US allegations.
Vedanta going ahead with its own offering shows confidence in its prospects. The company extended due dates on some of its dollar bonds in January, seeking to improve its capital structure and overall financial position. It sold a $900 million, five-year callable note in September and raised another $300 million last month by reopening the same debt.
Investors have rewarded the moves so far. Vedanta Resources Finance II Plc’s notes due in April 2026 have climbed nearly to par, after touching a low of about 60.4 cents in January, according to data compiled by Bloomberg. With a 77% gain this year, the notes are one of the best-performing junk bonds in Asia.
While the exact amount of the benchmark-sized bond will be known later in the day as the sale progresses, Nomura Holdings Inc. expects the company to raise about $600 million to $800 million through equally split tranches. The lender sees fair value for Vedanta’s 3.5-year part at about 9.9% and for the seven-year portion at around 10.7%, its Singapore-based analyst Eric Liu wrote in a note.
Orders for the offering have crossed $1 billion as of 5 p.m. on Monday in Hong Kong, according to the people familiar with the matter. Vedanta plans to use the proceeds from the current offering to refinance outstanding bonds due in 2028, the people said. Citigroup Inc., Barclays Plc, Deutsche Bank AG, JPMorgan Chase & Co. and Standard Chartered Plc are the banks managing the sale, they said.
Research firm CreditSights Inc. expects the company to raise as much as $1.2 billion through the offering. It sees Vedanta prioritizing repayment of its $894 million bond due in December 2028 and possibly a part of its $600 million note maturing in April 2026, Singapore-based analysts Lakshmanan R, Jonathan Tan and Nicole Chua wrote in a note.
Failure to refinance the 2026 debt by December next year would result in acceleration of maturities of the entire December 2028 bonds to April 2026, CreditSights said. It sees the fair value for the 3.5-year portion at 9.45% and seven-year tranche at 10.46%.
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