Bharti Airtel has this week tied up $7.5 billion of loans from a consortium of global banks to finance its proposed takeover of the African assets of Kuwaiti telecom firm Zain.
The pricing of such a large loan tranche is an indication that Indian companies can access global debt markets despite the fact that they are still jittery. Bharti has got the money for around five years at a slim 1.95 percentage points premium over the benchmark London interbank offered rate, or Libor. The one-year dollar Libor is 1.31%.
We compared this pricing with what AAA-rated UK companies are currently paying for five-year, fixed-rate dollar loans in London. The corporate yield curve on our Bloomberg screen shows that such loans are being priced at around 3.8%, more than what Bharti is paying.
Even the best companies from emerging markets used to be shut out of the global bond markets during earlier episodes of financial crisis. The fact that Bharti managed to get an M&A loan at this rate shows that the times have changed—for the better.