Vodafone Idea reimbursement insurance lifts obligations, Telecom News, ET Telecom

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MUMBAI: Vodafone Idea (Vi) reportedly provided bondholders with interest repayments / payments due later in the year, rekindling a dry spell in the secondary market. In the first two and a half months of 2021, bonds worth Rs 674 crore changed hands, which is more than seven times the value of the transaction reported between October and December at around Rs 90 crore. Last year. They yielded between 26 and 29 percent, much lower than in the past.

The company has yet to miss or delay payments, which has boosted investor confidence, brokers said. Vi did not comment.

“Vi has updated us and has not insured any faults in the future. We have received our contributions in the past without a single day of delay, ”said one of the institutional bond investors ET spoke to. Some payment obligations appear around November-December.

The largest transaction took place on March 3 when bonds worth Rs 263 crore were traded at a 15% discount. The weighted average yield was 28.78% on the exchange platform. When yields go up, prices go down. The yield came in at 26.4 percent last Monday in a small trade.

“We are seeing an increase in secondary transactions in Telecom (Vi) bonds,” said Ajay Manglunia, managing director – fixed income at JM Financial. “We come together, some high net worth or foreign investors are willing to bet on Vi, which is trying to regain market share through multiple measures.”

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

Until September, the secondary market remained dry for about a year, with Vodafone papers losing up to 42.9% in October 2019.

Local mutual funds and a next-generation Mumbai-based private bank reportedly sold the papers to high net worth individuals or distressed foreign funds, market sources said.

“There are knowledgeable bargain hunters in the bond market who would buy these bonds at a discount,” said Joydeep Sen, consultant at Phillip Capital. “There would be nervous investors who wanted to move. “

“In order for Vodafone to stabilize and be firmly above the cliff, they have to raise significant capital,” he said.

Of late, there has been some positive news as the cash-strapped telecom company added customers in January, the first time in 14 months.

Vi tried to raise funds offshore, which could be hybrid in nature like convertible instruments. Local lenders are reluctant to lend new money unless there is an infusion of funds, either from global investors or from the parent company itself.

Vi reportedly called on a new set of US-based private equity players, including KKR and Carlyle Group, to secure funding of around $ 2-2.5 billion (Rs 14,500-18,100 crore) after his recent funding negotiations with the consortium led by Oak Hill. gone bad, ET reported on March 16.


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