Airtel to issue corporate bonds worth Rs 5 thousand crores.

Veteran telecom company Airtel is offering an investment opportunity. The company plans to raise Rs 5,000 crore through corporate bonds.

These will be rupee bonds issued for 3-10 years. The interest rate will be 8%-8.25%. At present, the interest in bank FD is around 5%-7%. This is more than that. The money raised through company bonds will be used to refinance existing borrowings. 

The company’s chairman Sunil Mittal wants to strengthen the balance sheet by refinancing high-cost debt before the 5G spectrum auction. The company had earlier this month announced a fundraising plan of Rs 7,500 crore. The plan to bring bonds worth Rs 5,000 crore is part of this. According to media reports, the company is also planning for offshore bonds.

1.60 lakh crore debt on the company. 

Airtel’s net debt at the end of December was around Rs 1.60 lakh crore, while it was Rs 1.66 lakh crore at the end of September.

Last September, CRISIL Ratings downgraded its long-term rating on Bharti Airtel’s bank loan facility and debt program from AA/stable to AA+/stable. The rating firm expects the company’s credit risk profile to improve further in the near-to-medium term due to the tariff hike. 

Google will invest 1 billion dollars. 

Last month, American company Google said that it would invest up to $1 billion in Bharti Airtel. $700 million and $300 million will be invested over the next five years for a 1.28% stake in the company. It will be used for making affordable smartphones and for 5G. 

What is a Corporate Bond? 

Companies issue corporate bonds. Companies raise debt by issuing such bonds as an alternative to bank loans.

You can check how safe a corporate bond is from the credit rating given by rating agencies. Bonds of companies with an AAA rating are considered the safest and carry less risk than bonds with an AA rating

Published By: Jaspreet Singh

Edited By: Kritika Kashyap