Vodafone Idea repayment assurance lifts bonds - ET Telecom

Vodafone Idea repayment assurance lifts bonds – ET Telecom

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MUMBAI: Vodafone Idea (Vi) is said to have assured bondholders of repayments/interest payments falling due later in the year, reviving a dry secondary market spell. In the first two and a half months of 2021, bonds worth Rs 674 crore changed hands, which is over seven times larger than the transaction value reported between October-December at about Rs 90 crore last year. They yielded in the range of 26-29 percent, much lower than the past.

The company has not yet missed or delayed payments adding to investor confidence, dealers said. Vi didn’t comment.

“Vi has been updating us and assuring no defaults in future. We have received our dues in the past without a single day delay,” said one of the institutional bond investors, ET spoke with. Some payment obligations are appearing around November-December.

The largest trade took place on March 3 when bonds worth Rs 263 crore were transacted at a price discount of 15 percent. The weighted average yield was at 28.78 percent on the exchange platform. When yields rise prices fall. The yield came off to 26.4 percent last Monday in a small trade.

“We are observing a rise in secondary trades of the telecom (Vi) bonds,” said Ajay Manglunia, managing director – fixed income at JM Financial. “We gather, some wealthy or foreign investors are ready to take a bet on Vi, which is trying to regain market share through multiple measures.”

“The company does not have any default track record for bond investors,” he said.

Until September, the secondary market remained arid for about a year since Vodafone papers had yielded as high as 42.9 percent in October 2019.

Local mutual funds and a Mumbai-based new generation private bank have reportedly sold those papers to high networth individuals or foreign distressed funds, market sources said.

“There are informed bargain-hunters in the bond market who would be buying these bonds at a discount,” said Joydeep Sen, a consultant at Phillip Capital. “There would be jittery investors who want to move out.”

“For Vodafone to stabilize and be firmly over the cliff, they have to raise a significant amount of capital,” he said.

Of late, there is some positive news-flow as the cash-starved telecom company added customers in January, the first time in 14 months.

Vi has been trying to raise offshore funds, which could be hybrid of nature like convertible instruments. Local lenders look averse to lending any new money unless there is any fund infusion, either from global investors or by the parent company itself.

Vi is believed to have dialled a new set of US-based private equity players, including KKR and Carlyle Group, to secure around $2-2.5 billion (Rs 14,500-18,100 crore) funding after its recent fundraising talks with the Oak Hill-led consortium went sour, ET reported on March 16.

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