By Dharamraj Dhutia and Bhakti Tambe
MUMBAI: India Bharti Telecom plans to the bond market after a one-year hiatus, with the company looking to raise a whopping 70 billion Indian rupees ($858.32 million) through shorter-term bonds, according to a term sheet viewed by Reuters on Thursday.
The telecommunications operator, who has an interest in Bharti Airtel plans to raise money in three tranches and invited bids from investors on Friday, three investment bankers also confirmed.
“There are fears that corporate bond yields will rise further as the market expects the spread between corporate bonds and government bonds to widen now,” said Venkatakrishnan Srinivasan, founder and managing partner at debt advisory firm Rockfort Fincap.
“That’s why most companies rush to lock in fixed income instruments.”
Bharti Telecom aims to raise 15 billion rupees through two-year bonds with a coupon of 8.70% and 25 billion rupees through three-year bonds with a coupon of 8.80%.
It also aims to raise 30 billion rupees through three-year bonds at a six-month marginal interest rate, currently at 8.40%, through Kotak Mahindra Bank . This issue has a call option at the end of the first and second years.
The company did not immediately respond to an email from Reuters asking for comment.
Bharti Telecom will use the proceeds to refinance or service its debt and to pay all fees, costs and expenses associated with the issuance, according to the term sheet.
Kotak Mahindra Bank is the sole organizer of the bond issue, the allotment of which will take place on November 21.
The notes have a rating of AA+ CRISIL and continue to take into account the company’s healthy debt backing market value, as well as its robust financial flexibility, driven by the strong reputation of its promoters, the rating agency said.
“We could see telecom companies tapping into the bond market. During the initial spectrum payments, these entities preferred to tap into the CP market to complete the process and most likely they are trying to refinance their CP instruments,” added Srinivasan.
According to an ICRA assessment document, Bharti Telecom’s trading papers, valued at around Rs 116 billion, will expire in the coming weeks.