Bharti Telecom raises Rs 10,500 crore in twin bond issue; mutual funds, insurers lead the demand

Major domestic financial institutions, including mutual funds, insurance companies and pension funds, on Tuesday subscribed to Bharti Telecom’s twin bond issue worth Rs 10,500 crore, the largest issuance in the domestic market so far this fiscal.

The parent of India’s second largest mobile network, Airtel, raised an identical Rs 5,250 crore through two bonds, a 24-month paper and a 38-month issue. The money will be used to pay off debts maturing later this month and early next month, people familiar with the details said.

A spokesperson for Bharti Telecom did not respond to an email seeking comment.
Axis Mutual Fund, ICICI Prudential Mutual Fund, Aditya Birla Mutual Fund, DSP Mutual Fund and Nippon India Mutual Fund were among the top investors for the 24-month issue.

Spokespeople for DSP and Axis Mutual Fund said the company does not comment on specific investments. Spokespeople for other companies mentioned above did not respond to separate emails seeking comment.

“Demand was strong. The 24-month bond was largely subscribed by mutual funds, while some insurance companies also participated in the 38-month issue. Strong demand kept the coupon slightly within original expectations,” said a person familiar with the issue. The coupon on the 24-month bond ended up costing 7.31% lower than the 7.35% issue, while the 38-month coupon cost 7.43% compared to the initial bond of 7.45% and was underwritten by both. investment funds and insurance companies. Standard Chartered and Barclays were the bankers in this matter.

SBI Life Insurance, ICICI Prudential Life Insurance and SBI National Pension Scheme (NPS) were among the top investors for the 38-month issue. In both issues, 30% of the bonds were reserved for anchor investors.

A spokesperson for SBI Life said the company does not comment on specific investments. ICICI Pru Life did not respond to an email seeking comment. SBI NPS could not be reached.

In July, Crisil Ratings had upgraded its rating on Bharti Telecom’s non-convertible debentures (NCDs) to AAA from AA+, driven by an improvement in the business and financial risk profile of its subsidiary Bharti Airtel Ltd.

Bharti Telecom is the largest shareholder of Airtel with a 40.47% stake.

“Although Bharti Telecom is exposed to refinancing risks as it has significant repayments to be made in the current fiscal, the company, however, has access to capital markets for financing and has an established track record of refinancing debt at competitive rates,” Crisil said.