Mumbai, India, June 4, 2001—As part
of its efforts to be more responsive to client needs and extend credit
in local currency, the International Finance Corporation has offered a
structured partial credit guarantee for a local currency bond issue by
Bharti Mobile Limited (BML).
The bond issue—which has been structured as three different offerings
with tenors of five, eight and 10 years respectively—will encourage mutual
funds and short term investors to finance infrastructure projects. It
will also target different investor market segments and help create liquidity
in local currency corporate bond markets. The total issue size is
Indian Rupees 2.1 billion (about US$45 million). CRISIL, the Indian
affiliate of Standard & Poors and ICRA, the Indian affiliate of Moodys,
have rated the debt issue AA+ and LAA+ respectively.
The issue was very well received in the market with significant over-subscription.
In addition, its innovative structure drew strong support from mutual
funds and newly established insurance companies, thus providing a model
by which these non-traditional sources may be used to finance long-term
Mr. Mohsen Khalil, Director of the joint IFC-World Bank department for
Global Information and Communication Technologies, said that the investment
will establish a benchmark in the Indian domestic capital markets for high
quality infrastructure debt paper that has the potential for secondary
trading. He added that it would provide an instrument by which India’s
high savings rate might be used to fund much needed infrastructure activities.
Ms. Nina Shapiro, IFC Treasurer, said that the new product addresses the
need for long-term local currency funds for non-AAA corporations which
are often not available in the capital or bank markets of developing market
countries. IFC now plans to offer partial credit guarantees on a
global basis to other clients in the emerging markets for bond and loan
transactions, she added.
By offering a partial guarantee, rather than a full guarantee, IFC is able
to mobilize additional funds by having investors invest in debentures in
excess of IFC’s guaranteed amount. This co-financing between IFC
and the Indian capital markets allows BML to access new funding sources
and raise funds in excess of IFC’s guaranteed amount. BML, which
operates cellular licenses in Karnataka and Andhra Pradesh, is a part of
Bharti Enterprises, one of India's leading telecom conglomerates and the
only integrated private sector telecom company in India.
Mr. Sunil Bharti Mittal, Chairman and Group Managing Director, Bharti Enterprises,
said that Bharti was interested in creating path-breaking solutions and
was pleased to partner with IFC in this innovative infrastructure
project financing initiative – a significant first for India.
Mr. Akhil Gupta, Joint Managing Director, Bharti Enterprises, added that
this type of innovative infrastructure project financing symbolizes Bharti's
ability to raise funds for its projects well in time and reinforces its
commitment to build India’s telecom infrastructure.
The mission of IFC, part of the World Bank Group, is to promote sustainable
private sector investment in developing countries as a way to reduce poverty
and improve people’s lives. IFC finances private sector investments
in the developing world, mobilizes capital in the international financial
markets, and provides technical assistance and advice to governments and