India’s second-largest telco is in discussions with top foreign banks, including Barclays, Standard Chartered Bank and Citi, to explore a US dollar bonds floatation in overseas markets in one or more tranches this fiscal year, they said.
“Airtel is in initial talks with banks for a dollar bond issuance of up to $1 billion,” a banker aware of the matter told ET. “It would take some time for all regulatory approvals to come; the talks are at the stage of setting up a framework.”
Big Capex Plans
While full contours of the fundraising have yet to be finalised, the offshore bonds are likely to have three-five year maturities, the people cited above said.
The Sunil Mittal-led telco’s consolidated net debt rose 1.6% sequentially to Rs 2.13 lakh crore in the quarter ended March, largely due to an increase in lease liabilities.Its managing director Gopal Vittal, in fact, had said during the telco’s fourth-quarter earnings call last month that Airtel is looking to cut its debt to more comfortable levels as that would give it more headroom to manoeuvre and do things that the business needs for sustaining growth.The offshore fundraise plan via bonds also comes at a time when Airtel’s annual India capital expenditure is estimated to stay elevated at around ₹28,500 crore this fiscal year, akin to the levels incurred in FY23, amid aggressive 5G rollouts and rural push.The telco has been rapidly expanding its 5G network since last October, having rolled out next-gen services in more than 3,500 cities/towns. It aims to launch 5G in all urban areas by September and is targeting an all-India rollout by December 2023. Airtel did not respond to ET’s queries as of press time Friday. Barclays and Standard Chartered declined to comment on the matter while an email to Citi did not elicit a response. Airtel shares closed 0.9% higher at ₹837.40 on the BSE Friday.
Amid hopes of monetary tightening in the US drawing to a close, some Indian companies, including State Bank of India and Rural Electrification Corp, have tapped the international debt capital markets over the last couple of months. In late April, SBI raised $750 million through five-year bonds at a coupon of 4.875%. The rate of interest for SBI’s bonds was considered to represent an aggressive spread over US bond yields of comparable maturity, reflecting firm demand from investors.
“Of late, much of the interest has shifted from the loans to the bond market,” a foreign bank executive said. “Given current spreads and perceptions of US interest rates not going up much further, bond issuance is seen as a better way to diversify fundraising, and we could soon see a pick-up in refinance-related issuances,” said the person who wished not to be identified.
