India New Issue-Bharti Telecom dials bond market after a year with $850 mln plan

ICRA

17/11/2022 07:30

By Dharamraj Dhutia and Bhakti Tambe
       MUMBAI, Nov 17 (Reuters) - India's Bharti Telecom is
planning to tap the bond market after a year's gap, with the
company looking to raise as much as 70 billion Indian rupees
($858.32 million) through shorter-tenor bonds, according to a
term sheet seen by Reuters on Thursday.
    The telecom operator, which holds a stake in Bharti Airtel
 BRTI.NS , plans to raise funds in three tranches and has
invited bids from investors on Friday, three merchant bankers
also confirmed.
    "There is a fear of corporate bond yields rising further as
the market expects the spread between corporate bonds and
government bonds to start widening now," said Venkatakrishnan
Srinivasan, founder and managing partner at debt advisory firm
Rockfort Fincap.
    "Hence, most companies are rushing to lock in fixed-rate
instruments." 
    Bharti Telecom aims to raise 15 billion rupees through
two-year bonds at a coupon of 8.70% and 25 billion rupees
through three-year bonds at an 8.80% coupon. 
    It also aims to raise 30 billion rupees through three-year
bonds at a six-month marginal cost of lending rate, which
currently stands at 8.40%, through Kotak Mahindra Bank
 KTMB.NS . This issue will have a call option at end of the
first and second years.   
    The company did not immediately reply to a Reuters e-mail
seeking comment.
    Bharti Telecom will use the proceeds to refinance or service
its debt and to pay all fees, costs and expenses related to the
issue, according to the term sheet.
    Kotak Mahindra Bank is the sole arranger for the bond issue,
allotment for which will happen on Nov. 21.
    The notes are rated AA+ by CRISIL and continue to factor in
the healthy market value to debt cover of the company as well as
its robust financial flexibility, driven by the strong
reputation of its promoters, the rating agency said.
    "We could witness telecom companies tapping the bond market.
During the initial spectrum payments, these entities preferred
to tap the CP market to complete the process and most likely
they are trying to refinance their CP instruments," Srinivasan
added.   
    Bharti Telecom commercial papers, worth around 116 billion
rupees, are due to mature over the next few weeks, according to
an ICRA rating document. 
($1 = 81.5550 Indian rupees)
 (Editing by Swati Bhat and Janane Venkatraman)
 ((Dharamraj.dhutia@tr.com))