India-focused mining group Vedanta Resources
The London-listed resources firm is considering issuing a 5.5 year tranche yielding in the low-8-percent-range and a 10-year tranche yielding in the high-8-percent-range, the source added, citing talk with the lead managers for the bond sale.
Vedanta may also consider an additional seven-year euro tranche, the source said.
All the talks at this stage are very informal and very initial, said the source, who declined to be identified because he was not authorised to talk to the media about the sale.
Vedanta could announce guidance and further details as early as Monday during U.S. hours, said a separate source who is involved in the sale but who declined to be identified.
The mining group last week sent a term sheet to investors announcing a potential multi-tranche dollar debt transaction.
A unit of Vedanta, Sterlite Industries
The proposed bond sale also comes after Vedanta obtained financing for a $1 billion 4.75 year loan to refinance debt related to its purchase of a controlling 51 percent stake in Indian mining firm Sesa Goa
Vedanta's proposed debt issuance has been rated BB by Standard & Poor's (S&P) and Ba1 by Moody's, both just a step below the investment-grade level.
The transaction comes after two high-yield rated debt sales from Asia have been shelved this year, raising doubts about whether investors are ready for junk-rated issuance.
Indonesian energy and construction firm Truba Alam
Trade and Development Bank of Mongolia postponed this month its $100 million sale that was being offered at yields of 11.5-11.75 percent.
Vedanta is being pitched as issuer likely to get upgraded soon, the investor source told Reuters, and hence the issue ought to be considered in the lower rung of investment grade.
S&P raised its outlook on Vedanta to positive earlier this month citing improving financial fundamentals and increased clarity on funding commitments.
The yields being offered are in line with the 8.5 percent coupon that Singapore-listed commodities firm Noble Group
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