Bharti hits overseas bond market, to raise at least $500 mn

Mumbai: Telecom major Bharti Airtel today hit the overseas bond market to raise a minimum of $500 million, said merchant banking sources who are advising on the sale.

“The bond sale programme, which is going to be a benchmark size, is carried out by the company’s foreign arm-Bharti Airtel International Netherlands. The company has given an initial pricing guidance of 5.5 percent. The final coupon and size will be fixed later today,” a merchant banker working on the issue told PTI.

[caption id=“attachment_647487” align=“alignleft” width=“380”] In June 2011, Bharti had reportedly met investors but ultimately did not go through with the bond offering. Reuters[/caption]

Last Monday, Bharti had launched roadshows in Asia, Europe and the US and had picked seven foreign banks for this unsecured senior bond issue, or RegS bonds, which can be issued to non-US residents and qualified institutional buyers with lesser protection clauses.

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Barclays, BNP Paribas, Citi, Deutsche Bank, HSBC, StanChart and UBS are the arrangers for the investor meet. Bharti Airtel carried a BBB- rating from Fitch, BB+ frm S&P. A benchmark-sized bond means raising at least $500 million and benchmark bonds are those which provide a standard against which the performance of other bonds can be measured.

On February 1, Bharti Enterprises Group, (holding company of Bharti Airtel) Chief Financial Officer Sarvjit Dhillon had said the company was planning to raise up to $1 billion before the end of the fiscal.

In June 2011, Bharti had reportedly met investors but ultimately did not go through with the bond offering. If the Bharti issue mops up at least $500 million, the company will be the second largest private sector borrower to tap the global bond markets this year after Reliance Industries’ $800 million perpetual bond in late January.

More domestic companies are likely to access overseas markets for funding as rupee funds are expensive now. So far in 2013, over half a dozen companies including RIL, PowerGrid, Tata Com, ICICI Bank, HDFC Bank, among others raised $3.25 billion from overseas debt market.

As of the December quarter, Bharti had total debt of $13.6 billion and cash and equivalents of $1.9 billion. As many as 91 percent of the total debt are on floating rate, thus increasing the cost of servicing them. But out of the total debt, only about 19 percent is secured and about 63 percent of is marked in US dollars.

Regulation S bonds or RegS bonds are those offered to non-US residents and qualified institutional buyers (under an exception to US securities laws enacted in 1990) and do not enjoy the same legal protection as other issues enjoy.

Bharti Airtel Limited is a leading integrated telecommunications company with operations in 20 countries

across Asia and Africa. In India, the company’s product offerings include 2G, 3G and 4G services, fixed line, high speed broadband through DSL, IPTV, DTH, enterprise services including national & international long distance services to carriers. In the rest of the geographies, it offers 2G, 3G mobile services.

PTI