Airtel raises $2 bn in dual-currency bonds

Proceeds will be used in refinance andrepayment of Bharti Airtel's existing foreign currency debt

Bharti Airtel, the country’s largest telecom operator by subscribers, on Tuesday said it had raised about $2 billion (Rs 11,928 crore) in dual-currency international bonds — $1 billion and ^750 million. In these, interest and principal are paid in different currencies. The proceeds will be used to refinance and repay old foreign-currency debt.

The company said it was the first dual-currency debt issue and largest fund-raising in one go by an Indian entity. The company said the current dollar notes were subscribed eight times the amount on offer with a little over 550 accounts participating, while the euro bonds were subscribed 5.3 times with about 400 accounts participating.

“The dollar notes have been priced 270 basis points over the 10-year US Treasury with a fixed coupon of 5.35 per cent a year to yield 5.361 per cent,” according to the company. The euro notes have been priced 225 basis points over the seven-year EUR Mid Swaps with a fixed coupon of 3.375 per cent a year to yield 3.498 per cent.

“We now have $5 billion of bonds outstanding, across five-, six-, seven-, nine- and 10-year tenures across the dollar, euro and Swiss franc,” Group Treasurer Harjeet Kohli said. “Through this as well as the previous bond issus, all finance taken for the acquisition of Zain in 2010 have been successfully refinanced well ahead of their tenure,” Kohli said. Barclays, Bank of America Merrill Lynch, BNP Paribas, HSBC, JPMorgan and Standard Chartered Bank were the joint lead managers for the offering.

Meantime, its fully owned arm, Bharti Airtel International (Netherlands), has successfully priced a dual-currency issue of guaranteed long-maturity notes of $1 billion at 5.35 per cent due in 2024 and euro 750 million at 3.375 per cent due in 2021. The notes will be fully and unconditionally guaranteed by Bharti Airtel. Bharti will apply the net proceeds to refinance its existing debt. This refinancing exercise has significantly lengthened the average maturity profile of Bharti’s debt. With this, the company has fully refinanced the original $9-billion acquisition facility and also taken care of all near-term maturities,” Bharti Airtel said.

The net debt at the end of March was Rs 60,542 crore. In March last year, Bharti raised $1.5 billion through foreign currency notes in two tranches. In the first round, it had raised $1 billion through Reg S bonds with a coupon of 5.125 per cent, maturing in 2023. (Reg S bonds are dollar-denominated ones that do not need to register with the US market regulator and are, hence, sold only to investors not belonging to the country. Consequently, these do not get the same legal protection that those under US securities law get.) In the second round within a month, it had raised $500 million, mainly to pay high-interest loans and for capital expenditure. The notes in the second tranche were issued at a premium.