Vedanta Resources Lines Up $5.2 Bn Debt Refinancing after Credit Rating Upgrades

Billionaire Anil Agarwal's Vedanta Resources will refinance $5.2 billion in US dollar bonds and loans, seeking to lower borrowing costs after securing credit rating upgrades, according to a Bloomberg report.

The UK-based conglomerate has hired eight banks for the deal, including Barclays, Citigroup, Deutsche Bank, JPMorgan Chase, Mashreq Bank, Sumitomo Mitsui Banking, First Abu Dhabi Bank and Standard Chartered Bank. A new bond issue is expected to be launched soon, the report added.

What the Refinancing Covers

Part of the proceeds will be used to refinance $3.6 billion of bonds maturing between 2028 and 2033, and $1.6 billion of loans due from 2028 onwards. The bonds were issued by group company Vedanta Resources Finance II PLC.

The deal may include amortising bonds with maturities of five, seven and 10 years, allowing the firm to repay principal gradually over time. Vedanta also plans to start exercising call options on those bonds this year. For securities that are not callable in the first half of 2026, it plans to offer investors a repurchase price between the bonds' make-whole value and market price.

Both S&P Global and Moody's upgraded Vedanta Resources' credit ratings last month, as per the report. Net debt has reportedly fallen to $4.9 billion as of March 31, from $8.9 billion five years earlier.

The company is targeting a reduction of as much as 300 basis points in funding costs through the refinancing. The transaction could help Vedanta lower its average borrowing costs from about 10%, according to a Bloomberg Intelligence analyst Mary Ellen Olson. The deal is also likely to smooth the company's debt maturity profile and cut medium-term repayment and refinancing risks, Olson added.

The refinancing comes as after the split of India-listed unit Vedanta into five separate businesses. In April, the company announced that eligible shareholders would receive one share each of — Vedanta Aluminium Metal, Vedanta Power, Vedanta Oil and Gas and Vedanta Iron and Steel for every share held in Vedanta — one of the biggest corporate restructurings in India's metals and mining space. Vedanta had set May 1 as the record date for the demerger, but since it was a market holiday, shares adjusted on April 30.