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Business News/ Market / Stock-market-news/  Airtel raises $1 billion in 10-year bond sale
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Airtel raises $1 billion in 10-year bond sale

The company's first such foreign bond sale this year was priced at 210 basis points above the 10-year US treasury

Bharti Airtel shares on Wednesday closed at `421.25 on the BSE, up 0.79% from its previous close, while India’s benchmark Sensex Index fell 1.29% to close at 26,837.20 points. Photo: Pradeep Gaur/MintPremium
Bharti Airtel shares on Wednesday closed at `421.25 on the BSE, up 0.79% from its previous close, while India’s benchmark Sensex Index fell 1.29% to close at 26,837.20 points. Photo: Pradeep Gaur/Mint

Mumbai: Bharti Airtel Ltd, India’s largest mobile phone operator, has raised $1 billion by selling 10-year bonds to investors across the globe. In a notice to local stock exchanges, the firm said the money raised will be used for capital expenditure. This is the company’s first such foreign bond sale this year.

The issue, which opened earlier on Wednesday, was priced at 210 basis points (bps) above the 10-year US treasury, a banker involved in the deal said. A basis point is one-hundredth of a percentage point.

The US 10-year bond was trading at 2.33% at 8pm on Wednesday, indicating that the final price of the issue is likely to be at 4.43% of the bond.

“They have managed to get total demand of $2 billion, of which they will retain $1 billion," said a banker involved in the deal.

“There was a lot of pent-up demand from the company’s last issue so investors were waiting for another one. This issue closed late night India time," said a second banker.

Bharti Airtel has been among the few Indian companies that have been a regular in the overseas bond market. In May 2014, the company raised money in dual currencies, selling dollar bonds worth $1 billion and euro bonds worth $750 million in one of the largest single tranche of bond issues from India.

“In that issue last year, we received bids worth about $9 billion, which meant that there was a lot of demand for a issue from this company. All that demand is supporting the latest issue," the second banker said.

The bond issue would be a “benchmark" one with a tenor of 10 years and has been rated by rating agencies Fitch Ratings Inc., Standard and Poor’s Ratings Services (S&P) and Moody’s Investors Service Inc., the company said.

S&P has issued a “BBB- (minus)" rating to the issue. In a note issued on Wednesday, the agency said it expects that the proceeds of the issue will help Airtel deleverage its balance sheet. “Bharti expects to primarily use part of the proceeds of the proposed notes towards capital expenditure, which we believe will enable the company to apply its business cash flows towards deleveraging," S&P said.

Seven banks are managing the issue—Barclays Plc, Hongkong and Shanghai Banking Corp. Ltd (HSBC), DBS Bank Ltd, Deutsche Bank AG, Bank of America-Merrill Lynch, BNP Paribas SA and Standard Chartered Plc.

In a separate note, Fitch said it expects Bharti Airtel to report lower debt by the end of the current fiscal year in March 2016.

“We believe that its net debt for the financial year to 31 March 2016 will reduce as we expect it to use its available cash and equivalents of $2.2 billion and expected proceeds of $2 billion from the sale of African tower assets to repay part of its $10.6 billion in net debt... The notes will rank pari passu (equal in all respects) with issuer’s existing and futures senior unsecured indebtedness," Fitch said.

The company’s net profit increased 31% in the quarter ended March to 1,255 crore, from 962 crore in the corresponding period last year, figures released in April showed.

Bharti Airtel shares on Wednesday closed at 421.25 on the BSE, up 0.79% from its previous close, while India’s benchmark Sensex Index fell 1.29% to close at 26,837.20 points.

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Published: 03 Jun 2015, 01:00 PM IST
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