Moody's: Bharti Airtel's Ratings Unaffected by Additional Debt Fund Raising
Published on: 14th Jan 2014
By: Ian Mansfield
The debt ratings agency Moody's says that the ratings at India's Bharti Airtel remain unchanged following the announcement of a tap bond offering on its existing EUR 750 million of debt that was due to be repaid in 2018.
The outlook on Bharti's ratings is stable.
"Since the majority of the proceeds will be used primarily to refinance debt, the additional issuance will be leverage neutral, and will therefore have no impact on Bharti's ratings," says Laura Acres, a Moody's Senior Vice President.
"This issuance will also extend the company's debt maturity profile and diversify currency risk away from its USD debt, which is credit positive" adds Acres, also Moody's lead analyst for Bharti.
Moody's said that the company's rating is underpinned by its receipt of strong and growing cash flows from its Indian operations, particularly in wireless, where it enjoys a well-established and leading market position under the Airtel brand.
At the same time, concerns exist regarding emerging market risks and, in particular, changes to the regulatory and political environments in the countries in which it operates, especially after its 2010 investment into 15 (now 17) African countries.
Bharti financial metrics are recovering following the 2010 debt-funded and transformational acquisition of wireless assets in Africa, coupled with high payouts on 3G auctions in the same year. Although its current leverage remains high for the current rating level, they anticipate continued absolute and relative deleveraging over the next 2-3 years.
Given Bharti's recent history of a transformational and debt-funded acquisition, Moody's would also view negatively any event risk associated with a material acquisition or other corporate activity that negatively impacts the company's existing or targeted leverage ratios.