 "RCom, BPCL plan to launch dollar bonds")
Anil Ambani-owned wireless telephony operator Reliance Communications and energy firm Bharat Petroleum are planning to raise funds from overseas markets this month to fund their capital expenditure in India.
While Reliance Communications is planning a $500 million issue which would be marketed from Monday, BPCL is targeting to raise a similar amount for the expansion of its Kochi refinery.
While Reliance Communications is planning a $500 million issue which would be marketed from Monday, BPCL is targeting to raise a similar amount for the expansion of its Kochi refinery.
For Reliance Communication, it will be second time the Ambani company is testing the investors’ appetite for its paper. In December last year, its $255 million was deferred for lack of investors’ appetite. DBS Bank, StanChart are the joint book runners for the RCom issue.
BPCL has a plan to raise $2 billion medium term note and bankers say it may raise around $500 million from investors. Deutsche Bank, Citigroup, HSBC and Standard Chartered will lead BPCL’s offering. BPCL is planning a Rs 16,500 crore investment to expand capacity of its Kochi refinery in the next two years.
BPCL has a plan to raise $2 billion medium term note and bankers say it may raise around $500 million from investors. Deutsche Bank, Citigroup, HSBC and Standard Chartered will lead BPCL’s offering. BPCL is planning a Rs 16,500 crore investment to expand capacity of its Kochi refinery in the next two years.
On RCom, rating firm Moody’s said RCom’s rating (Ba3) reflects its meaningful market position as the fourth largest integrated mobile operator in India's growing telecommunications industry. But Nidhi Dhruv, Moody's Assistant Vice President and Analyst, said the rating is constrained by RCom's high leverage and strained liquidity profile, thereby weakly positioning it in its rating category.
"However, the management has undertaken a deleveraging initiative that is premised largely on the monetisation of various non-core assets, alongside continued improvements in the operating performance of its core Indian operations," he said.
"However, the management has undertaken a deleveraging initiative that is premised largely on the monetisation of various non-core assets, alongside continued improvements in the operating performance of its core Indian operations," he said.
In addition, RCom's spectrum payments for the recently completed Indian spectrum auction was at the higher end of our expectation, totaling Rs 4,300 crore. However, the company has opted for a deferred payment schedule, which will limit its upfront cash outflow at around Rs 1,100 crore. Nonetheless, we will treat the deferred portion of the spectrum payments as debt which will keep leverage at the higher end of our tolerance for the Ba3 rating, the rating firm said in a statement.
While RCom has begun to reduce its debt level -- most recently with the $1 billion equity raised via the issue of warrants and a qualified institutional placement completed in June 2014 -- its leverage, as measured by adjusted debt/EBITDA, remained high at 5.2x for the 12 months ending December 31, 2014.
The company's liquidity profile, in the absence of the planned asset sales, remains weak, Moody's said. In the absence of the asset sales, RCom will need to raise about Rs 5,000 to Rs 6,000 crore - including the proposed bond issuance proceeds - over the next 12 months, but given the company's banking relationships we do not consider the refinancing risk to be substantial.
"Any delays in the company's deleveraging plans on the back of asset sales, will exert downward pressure on the rating. Moody's will closely review the progress on RCom's stated plans over the next 6-9 months," Dhruv said.
"Any delays in the company's deleveraging plans on the back of asset sales, will exert downward pressure on the rating. Moody's will closely review the progress on RCom's stated plans over the next 6-9 months," Dhruv said.