The proceeds will be used for capital expenditure and repayment of existing high-cost debt. The initial price guidance was 215 basis points over the 10-year US Treasury yield. The price was later tightened significantly amid higher investor demand.
This is supposed to be the borrower’s first issuance in the international bond market.
Those bonds with 10-year maturity were finally priced after adding 187.5 basis points spread over the US Treasury benchmark. It likely obtained a subscription of about $1.5 billion at the time of writing this report.
Bank of America, Barclays Citigroup, and HSBC are among others that helped the company raise the funds. Summit Digitel could not be contacted immediately for comments.
Global rating companies S&P and Fitch rated the papers BBB-, the lowest in the investment-grade category, in sync with India’s sovereign rating grade.
Summit provides the essential infrastructure and currently derives almost its entire revenue and EBITDA from Reliance Jio, with total locked-in revenue of $30 billion at the end of March 2021.
“Summit’s EBITDA generation visibility is high given revenue and costs are largely fixed for 30 years with Reliance Jio and RIL backed entities,” Fitch said in a note a few days ago.
“Summit’s business profile also benefits from high entry barriers, low competition on minimal tower overlap, and growing tower demand, which are partly offset by its concentration on India,” it said.
Summit raised about Rs 11,836 crore via local bond sales, ET reported in March. That was record fund-raising by bonds issued in one shot via private placement.
The objective was to reduce overall borrowing costs taking advantage of record-low interest rates, dealers said.
Last October, Brookfield and a group of investors including Singapore’s GIC completed a deal to buy out Reliance Jio Infratel and renamed the company Summit Digitel Infrastructure.
In December 2019,
Investments and Holdings Ltd., a wholly-owned subsidiary of Reliance, had entered into a binding agreement with Brookfield Asset Management for an investment of Rs 25,215 crore in units proposed to be issued by the Tower Infrastructure Trust.
Summit Digitel’s net debt reportedly dipped by Rs 3600 crore to Rs 33,300 crore in FY21, but net debt to EBITDA is still high at 10.9x. It contributed 45% of the rental and power and fuel cost of RJio during the financial year.
