Fitch assigns investment grade rating to Airtel's bond

Fitch today assigned investment grade rating, with negative outlook, to Bharti Airtel's proposed billion-dollar bond sale that is in line with the company's long term rating.

The negative outlook has been assigned on account of ongoing regulatory uncertainty in its Indian operations, the global credit ratings firm said.

"Fitch Ratings has assigned Bharti Airtel International (Netherlands) BV's proposed foreign-currency senior unsecured notes an expected 'BBB-(EXP)' rating," the agency said.

"The notes will be unconditionally and irrevocably guaranteed by India's Bharti Airtel Ltd (Bharti, BBB-/ Negative) and are therefore rated at the same level as Bharti's Long-Term Issuer Default Rating of 'BBB-'," it added.

Sources said Bharti Airtel is likely to meet global investors early next week for a benchmark bond sale that is expected to raise $1 billion.

They said the company's plan to raise $1 billion was already shared by Bharti Enterprises Group Chief Financial Officer Sarvjit Dhillon on February 1.

"The final rating of the proposed notes is contingent upon the receipt of documents conforming to information already received. Bharti will use the proceeds from the proposed notes to refinance part of its existing debt and for general corporate purposes," Fitch said.

It added the negative outlook continues to reflect ongoing regulatory uncertainty in its Indian operations relating to a one-time charge for excess spectrum (over 6.2 MHz) and spectrum refarming.

"However, the charges are now likely to be phased over the life of the licence, rather than paid up-front, which will aid Bharti's deleveraging efforts," it said.

Fitch said at end-December 2012, Bharti had total debt of $13.6 billion and cash and equivalents of $1.9 billion.

"Of its total debt, only 19 per cent is secured and 63 per cent is denominated in USD," it added.