Mumbai: Bharti Airtel raised about $1.25 billion overseas via two sets of global papers — perpetual and vanilla bonds. The sales received bids worth over $2.5 billion, market sources told ET.
Multinational insurance giant AIA, China Life, Singapore-based Eastspring Investments, BlackRock were among bidders who wanted to subscribe those papers. While the first set of bonds offered around 4%, the other series was priced after adding 187.5 basis points over the ten-year US Treasury, sources said. Overall, these levels were about 35-43 basis points lower than the initial guidance. Individual investors could not be contacted immediately for comments.
“Pricing was tighter amid a growing number of bids for those papers,” said one of the bankers involved in the exercise. Both the issuances are expected to be at least of a standard benchmark size – of $500 million.
Perpetual securities with no fixed maturities were initially anticipated to offer 4.375% with a five-year call option. Other bonds were set to be priced after adding 230 basis points over the benchmark US treasury with over 10-year maturity.
About 10 investment banks, including Bank of America, Citigroup, JP Morgan, HSBC, Standard Chartered Bank, Barclays were helping the telco raise about $1 billion (7,500 crore). The borrower would be closing the subscription window Wednesday midnight local time.
The fundraising is aimed at building a war chest as India’s second-largest telco needs cash to buy spectrum in the upcoming 4G auction, invest in networks and also pay statutory dues, among other needs.
The overseas perpetual bonds are likely to be raised by Airtel’s Mauritius arm, Network i2i, and guaranteed by the telco. Bharti Airtel was the issuer for other set of papers.
Global rating companies Fitch and S&P assigned ‘BB’ grade to the perpetual papers, billed as quasi-equity, which is two notches lower than the other set of bonds, marked as BBB-, the lowest rank in the investment grade category.
‘We expect Bharti to generate small positive free cash flow (FCF) in FY21 on flat core capex, lower interest costs and the government’s two-year moratorium on the payment of existing spectrum dues,” the global rating company said in a note.
BNP Paribas, DBS Bank and SMBC Nikko are among others helping the borrower in the bond sales.