Bharti Airtel, country’s biggest telecom operator, on Wednesday announced that the company has raised Euro 750 million or nearly Rs 6,350 crore in the first bond issue by an Indian corporate. The company further said that the bonds attracted huge investor interest with an order book aggregating over Euro 3.8 billion from high quality investor accounts and was oversubscribed more than 5 times. As another step towards reducing its debt, the company plans to utilize the raised funds for the same purpose.
By the end of the second quarter of FY14, Bharti Airtel had a net debt of $ 9,697 million including its short term debt of $ 2,900 million. This fund raising would now help the company to refinance this short term debt. The money was raised at a coupon rate of 4.05 per cent for the five year paper. The coupon rate is the yield paid by a fixed income security.
The company in its official statement said, “Its wholly-owned subsidiary Bharti Airtel International (Netherlands) BV has priced EUR 750 Million, 4 per cent guaranteed senior notes due 2018. The notes will be fully and unconditionally guaranteed by Bharti Airtel.” Analysts also added that apart from improving the debt situation of the company, Bharti might also utilise this money to bid in the upcoming spectrum auction slated next month. This is the third bond issue by the private telecom operator in this calendar year. Roadshows for the issue were held in london, Paris, Amsterdam and Frankfurt last week.
The statement further added that the bonds were distributed 77 per cent to fund managers, 9 per cent to SSA/insurance, 9 per cent to private banks and 5 per cent to banks. Commenting on bond issue, Harjeet Kohli , Treasurer, Bharti Group said, “This transaction helps us continue to diversify sources of funding and the EUR financing also acts as a natural hedge to many of our African businesses where local currency is pegged to Euros.”
Barclays, BNP, DB, JP Morgan, Standard Chartered and UBS acted as joint bookrunners and joint lead managers on the offering. This is the third major bond sale by an India firm after the May 24 tapering talk by the US Fed, which spiked interest rates in western markets. The other two have been HDFC Bank’s $500 million in October and ICICI Bank’s $750 million last month.
Earlier in March this year, the company had raised $ 1.5 billion in overseas debt in two tranches. In terms of geographic distribution, the notes were distributed 38 per cent in the UK, 18 per cent in Germany and Austria, 35 per cent collectively in France, Switzerland, Scandinavia and Netherlands and other European countries and 9 per cent in Asia. Apart from that, Bharti in July had repaid a portion of its debt worth Rs 6,796 crore.