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Vedanta launches $775 mn convertible, shares drop

Vedanta launches $775 mn convertible, shares drop
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First Published: Tue, Mar 02 2010. 07 05 PM IST
Updated: Tue, Mar 02 2010. 07 05 PM IST
London: Indian-focused mining group Vedanta launched a $775 million convertible bond issue on Tuesday, seeking to refinance debt at lower interest rates, sending its shares lower.
“The market is taking the news poorly as it seems a surprise and there presumably is a fair amount of delta hedging going on,” said Liberum Capital in a note.
“Overall, we see this as an annoying event but not something which changes the spectacular growth outlook. We would be buyers on weakness.”
Shares in London-listed Vedanta slid 4.2% to 2,531 pence by 1316 GMT, lagging a 1.1 percent increase in the UK mining index.
Vedanta was the second best performing stock on the blue chip FTSE 100 index last year, surging 327%, but had shed 15% from a peak touched in January.
The seven-year bonds were expected to carry a coupon of 3.5-4%and have a conversion premium of 35-40%.
The expected interest rates on the new bond is lower than on some of its current paper. Vedanta said it recently redeemed $1.15 billion of bond debt which had coupons of 4.6 percent and 6.625%.
JP Morgan Cazenove and Morgan Stanley, joint bookrunners for the offering, have been granted a $75 million over-allotment option.
On 27 January, Vedanta posted a jump in third-quarter core earnings as metals prices rebounded and record amounts of iron ore and aluminium were churned out.
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First Published: Tue, Mar 02 2010. 07 05 PM IST
More Topics: Vedanta | Convertible Bonds | Bonds | Equities | FTSE |