Reliance Communications looking to raise funds via overseas debt for spectrum payment, capex

MUMBAI: Reliance Communications plans to tap the overseas bond market to help fund the upfront payment of nearly.`1,100 crore, or about $175 million, for the mobile airwaves it bought in the recent auctions and meet capital expenditure needs. Fitch Ratings has assigned an expected rating of BB- for the proposed senior secured notes issue, the ratings agency said in a statement Friday. The rating represents ‘speculative’ and indicates some vulnerability to default risk.

Fitch Ratings has assigned a better BBB- sovereign rating to India, indicating low risk. “RCom's 'BB-' IDR is constrained due to its higher leverage and weaker market position than average for Fitch's-rated Asian telcos,” the rating agency said in a note. The final rating of the proposed notes will depend on the receipt of documents conforming to information already received, it said.

The company didn’t respond to an emailed query seeking comment till press time on Friday. A media report has said that the company plans to raise some $500 million (about .`3,100 crore), while the Moody’s report said it may have to borrow .`5,000-6,000 crore, including the upcoming overseas bond sale, over the next year to pay for spectrum that it won in the sale, if it doesn’t manage to sell noncore assets to raise funds.