Vedanta raises Rs 2,575 crore via 3-year bond to refinance existing debt

India-listed Vedanta Limited on Friday raised ₹2,575 crore through a three-year bond sale paying a coupon of about 8.95% as market volatility pushed borrowing costs slightly higher than initially planned, people familiar with the matter said.

The issue was arranged by Barclays and Citigroup and was placed with institutional investors, including mutual funds, the people said.

The mining and metals conglomerate had initially explored pricing the bonds at around 8.75% for a similar tenor, but spreads widened due to recent geopolitical tensions and fluctuations in government bond yields, prompting a higher coupon.


The transaction is structured as a three-year non-convertible debenture issuance and has the option to raise over ₹2,000 crore if demand remains strong.

Vedanta has been an active issuer in domestic debt markets as it refinances existing liabilities and manages upcoming maturities.

Vedanta's leverage has remained high given the dividend outflows to its UK-based parent, Vedanta Resources Limited (VRL), which relies heavily on these payouts for servicing annual interest obligations of ₹5,000 crore -₹5,300 crore.

Vedanta Limited has carried high debt for years, largely because its parent, Vedanta Resources Ltd (VRL), has heavy borrowings of its own. Vedanta's steady dividend payouts to VRL-used to service the parent's interest bills-have kept pressure on the balance sheet. As a result, Vedanta's net leverage remained elevated at 3.2 times as of March 2024, only marginally lower than 3.4 times the previous year, according to a recent Crisil report.

However, with improved earnings and the reduction of net debt to ₹1.11 lakh crore in fiscal 2025, including VRL debt of ₹0.42 lakh crore, consolidated net leverage has reduced to 2.55 times in fiscal 2025 from 3.2 times in fiscal 2024, the ratings agency had said.