Vedanta Resources, Canara Bank set prices of their dollar bonds

By: | Published: August 4, 2017 5:22 AM

Canara Bank has priced its 5-year bonds at 150 bps over 5-year US Treasury yield to raise $400 million.

Vedanta is looking to raise between 0 million and billion through bonds having a tenure of seven years and remain non-callable till four years, a banker said. (Image: Reuters)

Vedanta Resources and Canara Bank on Thursday commenced pricing their respective dollar-denominated bonds, according to sources aware of the development. According to the latest information from bankers till the time of going to press, the final price guidance on Vedanta Resources bonds was being worked out even as the US markets opened. The initial price guidance stood close to 6.375%. It is a ‘Regulation S/144 A’ issue in which investors from the US can participate apart from those from Asia and Europe. The company is looking to raise between $500 million and $1 billion through bonds having a tenure of seven years and remain non-callable till four years, said a banker aware of the deal. Moody’s Investors Service has assigned a ‘B3’ rating to the proposed senior unsecured notes. Proceeds from the issuance will be used towards retiring, in part, the company’s existing term loans and a tender on its senior unsecured notes maturing in 2019 and 2021, the ratings agency said in a release.

Concurrent with the proposed notes issuance, Vedanta has also announced a conditional tender offer for its $774.8 million 6% 2019 notes, and $900 million 8.25% 2021 notes, the release said. Meanwhile, Canara Bank has priced its five-year bonds at 150 basis points over the five-year US Treasury yield to raise $400 million, according to bankers close to the deal.

The initial price guidance stood at 175 basis points over the five-year US Treasury yield, while the final price guidance narrowed in the range of 150-155 basis points over the corresponding treasury yield. The issue is a ‘Regulation S’ one in which US investors are not allowed to participate. “We saw a decent response from investors in Asia and Europe considering there is a scarcity of Indian paper overseas.

The issue was subscribed over four times because of which the bonds were priced at the tighter end of the final price guidance range,” said a banker close to the deal. Moody’s has assigned a ‘Baa3’ rating to the bank’s proposed senior unsecured notes issued under its $2 billion medium-term note (MTN) programme. The ratings agency pointed out that the drawdown will be carried out from the bank’s London branch, and the bonds will be listed on the Singapore Stock Exchange. Indian companies and banks have raised record funds via overseas bond issuances this year.

According to market sources and Bloomberg data, foreign currency bond issuances by Indian companies/banks have touched close to $10 billion in the first seven months of the calendar year. Axis Bank recently raised $500 million via its dollar bonds at 130 basis points over the 5-year US Treasury yield. In July, Greenko Dutch BV raised raised $1 billion, while Azure Power raised $500 million through dollar-denominated bonds.

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