Fitch has assigned Indian telco Reliance Communications’ (RCom) planned US dollar bond offering an expected rating of BB-.
DBS and Standard Chartered are acting as global coordinators for the proposed issue of senior secured notes, Reuters…
Fitch has assigned Indian telco Reliance Communications’ (RCom) planned US dollar bond offering an expected rating of BB-.
DBS and Standard Chartered are acting as global coordinators for the proposed issue of senior secured notes, Reuters reported.
The investor roadshow is reportedly set to start in Asia and Europe on Monday.
RCom, India’s fourth-largest telco, was not immediately available for comment.
Fitch noted that RCom will use part of the proceeds to fund the US$173m upfront payment needed for spectrum won in the March auction, while the rest will be for capital expenditure.
Last December, RCom reportedly abandoned plans to offer a US dollar-denominated bond following a poor response from US-based investors due to poor market conditions and pricing issues. The five-year senior secured notes were reportedly launched with an initial price guidance of 6.5% but failed to gain traction.
Explaining its rationale for the rating, Fitch noted that RCom’s issuer default rating (IDR), also BB-, reflects its higher leverage and weaker market position than average for telcos it rates in Asia.
The agency’s forecasted adjusted net leverage for Rcom for the year ended 31 March 2015 is 4.8x – significantly higher than the 2.5x and 3.5x it has forecasted for market leader Bharti Airtel and third-largest player Idea Cellular respectively.
However, Fitch predicts RCom will be able to reduce its leverage below 4.5x between 2015 and 2016.
“We believe that deleveraging will be mainly driven by an EBITDA expansion and a planned sale of non-core assets,” the agency said.
The telco’s management is committed to repaying some of its US$6bn in net debt by selling assets such as its subsea cable unit Global Cloud XChange, its pay-TV business and property, Fitch noted.
RCom spent a total Rs43bn (US$693m) in the March auction to renew expiring spectrum licences in four telecoms service areas and acquire additional airwaves.
In comparison, Airtel spent Rs293.1bn (US$4.7bn) and Idea Rs303.1bn (US$4.9bn).
