Bharti Telecom taps bond mkt for ₹7,000 cr

MUMBAI: Bharti Telecom has tapped the bond market after a year’s gap, with the company aiming to raise as much as ₹7,000 crore ($858.32 million) through short- tenor bonds, according to a term sheet seen by Reuters on Thursday.

The telecom operator, which holds a stake in Bharti Airtel, plans to raise funds in three tranches and has invited bids from investors on Friday, according to three merchant bankers.

“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 through two-year bonds at a coupon of 8.70% and ₹25 billion through three-year bonds at an 8.80% coupon.

It also aims to raise ₹30 billion through three-year bonds at a six-month marginal cost of lending rate, which currently stands at 8.40%, through Kotak

Mahindra Bank .

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 November 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, are due to mature over the next few weeks, according to a document released by credit rating agency ICRA.