Bharti Raises $1.25bn via Perp & 10Y Bond

Indian telecom operator Bharti Airtel raised $1.25bn via a dual tranche offering. It raised:

• $750mn via a 10.25Y senior bond at a yield of 3.261%, or T+190bp, 40bp inside initial guidance of T+230bp area
• $500mn via a subordinated perpetual non-call 5.25Y (PerpNC5.25) bond at a yield of 4%, 37.5bp inside initial guidance of 4.375% area

The 10.25Y senior bond has expected ratings of BBB-/BBB- in line with the issuer while the subordinated PerpNC5.25 issued by Network i2i have expected ratings of BB/BB, two notches lower. The 10.25Y bonds received orders over $1.5bn, 2x issue size. APAC took 33% while EMEA took 48% and North America 19%; Asset/fund managers received 80%, insurance companies 16%, corporates/brokers-dealers/private banks and others the remaining 4%. The perps received orders of over $1.4bn, 2.8x issue size. APAC took 33% while EMEA took 47% and North America 20%; Asset/fund managers received 86%, insurance companies 7%, corporates/brokers-dealers/private banks and others the remaining 7%. Proceeds will be used for capital expenditure, repayment of debt or any other purpose as allowed by regulations. S&P notes that the perps have five-year resettable coupons starting from 5.25 years, with step-ups of 25bp after the initial term of 10.25 years, and a further 75 basis points after 25.25 years. The terms of the perps allow Bharti Airtel to indefinitely defer coupon payments subject to restrictions on shareholder distributions, which explains the two notch lower rating to reflect subordination risks and voluntary coupon deferability. Bharti’s existing 5.65% Perps were flat at 106.32, yielding 3.9%.