Bharti Airtel is considering an offshore bond offering to generate up to $1 billion, or roughly Rs 8,200 crore, to pay off high-cost debt, strengthen its balance sheet, and cover some of its 5G capital expenditure requirements, according to insiders.
The second-largest telco in India is in talks with leading global banks, including Barclays, Standard Chartered Bank, and Citi, to see if it might issue US dollar bonds in one or more tranches on international markets this fiscal year.
A banker with knowledge of the situation informed ET that Bharti Airtel is in preliminary discussions with banks about issuing dollar bonds worth up to $1 billion. “The talks are at the stage of setting up a framework; it would take some time for all regulatory approvals to come.”
Plans for large capital expenditures
The people cited above claimed that the offshore bonds are likely to have maturities of three to five years, even if the exact details of the fundraising have not yet been determined.
Consolidated net debt for the Sunil Mittal-led telco increased 1.6% sequentially to Rs. 2.13 lakh crore in the three months ending in March, primarily as a result of rising leasing liabilities.
In fact, during the telco’s fourth-quarter earnings call last month, its managing director, Gopal Vittal, stated that Airtel is trying to reduce its debt to more comfortable levels, as that would give it more space to manoeuvre and take the actions the company requires for maintaining development. The attempt to acquire money abroad through bonds comes at a time when Airtel’s annual capital expenditure in India is predicted to remain high at over 28,500 crore this fiscal year, similar to the levels incurred in FY23, due to aggressive 5G rollouts and a push into rural areas.
Some Indian corporations, such as the State Bank of India and Rural Electrification Corp., have recently accessed the international debt capital markets amid expectations that the US monetary tightening process is coming to an end. SBI issued five-year bonds in late April with a 4.875% rate, raising $750 million. When compared to US bond yields of equivalent maturity, the interest rate on SBI’s bonds was thought to show an aggressive spread, reflecting strong investor demand.
According to a foreign bank executive, interest in loans has recently switched significantly to the bond market. Bond issuance is considered a better approach to diversifying fundraising given current spreads and assumptions that US interest rates won’t rise much more, and we may soon see a pick-up in refinance-related issuances, according to the individual who wished to remain anonymous.
