InvestorQ : What does Bharti Airtel plan to do with the $1.25 billion that it has raised in the global bond markets?
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What does Bharti Airtel plan to do with the $1.25 billion that it has raised in the global bond markets?

1 year ago

Bharti Airtel raised $1.25 billion overseas through the sale of senior bonds and perpetual bonds, representing one of the largest fundraising exercises by an Indian investment grade issuer since January 2019. It also goes to show that there is substantial appetite for Indian paper in the global markets. The bond issue was a tricky issue due to extremely low rates of interest prevailing across the global post the pandemic.

Bharti Airtel had priced the senior 10.25-year bonds worth $750 million at a yield of 187.5 basis points above the benchmark for an implied coupon yield of 3.25%. Also, its wholly-owned subsidiary Network i2i priced $500 million of guaranteed subordinated perpetual 5.25-year bonds at a coupon yield of 3.975%. Interestingly, this is the lowest yield that Bharti Airtel has sold 10-year bonds or even perpetual bonds.

Bharti has disclosed that it received orders from 92 accounts for senior bonds and 97 accounts for its perpetual bonds. Bharti secured more than 30% of its orders from Asia Pacific, over 45% from Europe, West Asia and Africa and the balance from the North American region. The offer was substantially oversubscribed and the peak order book of $5 billion allowed very fine pricing of the bonds at the lowest possible yields.

There are a number of reasons why Bharti Airtel is keen to prop up its capital buffers. It needs a war chest to bid for 4G spectrum auctions that coming up this year and will require a major advance payment on spectrum allocation. Secondly, it also needs a huge war chest to carry on its market leadership battle with Reliance Jio, especially considering that Bharti Airtel has been getting a bigger chunk of incremental market share in the recent past.