India’s Reliance Communications (RCom) is reportedly marketing its planned US dollar bond to yield about 6.5%.
The five-and-a-half year Reg S-only senior secured notes have a security package which includes tower assets, fibre optic cables, certain…
India’s Reliance Communications (RCom) is reportedly marketing its planned US dollar bond to yield about 6.5%.
The five-and-a-half year Reg S-only senior secured notes have a security package which includes tower assets, fibre optic cables, certain telecoms licences, a pledge over RCom’s stake in Reliance Communications Infrastructure, and shares in Reliance Telecom, Reuters reported.
There are also standard high-yield covenants such as a minimum fixed-charge coverage ratio of 2.25x, the report stated.
DBS and Standard Chartered are reportedly joint bookrunners.
An RCom spokesperson was not immediately able to comment on the matter.
The issue reportedly marks RCom’s first return to the bond market since last December when it abandoned plans for a US dollar offering, also launched with an initial price guidance of 6.5%, following a poor response from US-based investors. Poor market conditions and pricing issues were cited as reasons why the offering failed to gain traction.
Assigning the new issue a BB-(EXP) rating earlier this month, Fitch said part of the proceeds will be used to fund the US$173m upfront payment required for spectrum acquired in the March auction, while the rest will be for capex.
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.
Meanwhile, Moody’s rated the issue (P)Ba3, in line with RCom’s corporate family rating.
Nidhi Dhruv, an analyst with the ratings agency, said the bond rating reflects RCom’s “meaningful market position as the fourth-largest integrated mobile operator in India’s growing telecommunications industry”.
“In addition, its large domestic and international asset base of telecommunications infrastructure support the diversification of revenues and position the company to benefit from the oncoming growth in data demand in India,” he said.
However, Dhruv also highlighted RCom’s relatively high leverage as well as its “strained liquidity profile”.
Both agencies noted that the operator’s management has committed to repaying some of its US$6bn in net debt by selling non-core 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.
