According to two persons with knowledge of the situation, Barclays, Standard Chartered Bank, and Citi are among the leading foreign banks in conversations with India’s second-largest telco over the possibility of floating US dollar bonds in one or more tranches on foreign markets this fiscal year.
According to reports, Barclays, Standard Chartered Bank, and Citi are in talks with India’s second-largest telco about the possibility of floating US dollar bonds in one or more tranches on foreign markets this fiscal year.
According to a banker with knowledge of the situation, “Airtel is in preliminary discussions with banks for a dollar bond issuance of up to $1 billion.” All regulatory clearances would take some time to arrive; at this point in the negotiations, a framework is being established.
Huge Capex Plans
The people cited above claimed that the offshore bonds are anticipated to have maturities of three to five years even if the exact details of the fundraising remain to be 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 acceptable 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 moment 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.
Since October of last year
The telco has been aggressively growing its 5G network, rolling out next-generation services in more than 3,500 cities and towns. By September, all urban areas will have 5G service available, and by December 2023, the entire country of India will have it. As of Friday morning, publication time, Airtel had not responded to ET’s inquiries. Standard Chartered and Barclays did not elaborate on the situation, and Citi did not respond to an email. On the BSE on Friday, Airtel shares ended the day 0.9% higher at $837.40.
Some Indian businesses, notably 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. Late in April, SBI issued five-year bonds with a coupon of 4.875% in order to raise $750 million. Given the strong demand from investors, it was thought that the interest rate on SBI’s bonds represented an aggressive margin above the returns on comparable-maturity US bonds.
According to a foreign bank executive
Recently, much of the interest has moved from the loans to the bond market.” The person who requested to remain anonymous added, “Given prevailing spreads and opinions on US rates of interest not climbing up substantially, bond issuance is viewed as an improved method to broaden fundraising, and we are anticipating an upsurge in refinance-related issuances.”
