Mumbai: Voda Idea bond yield Jumps 43% - Vodafone IdeaNSE 1.59 % bond yields surged 42.91 per cent pulling prices down in a secondary market transaction on Wednesday as investors turned apprehensive over its financials. Normally, those bonds are traded in the 10-20 per cent yield range with limited secondary market transactions taking place. Bond yields and prices move in the opposite directions.
A British bank headquartered in London, keen on owning securities of distressed company papers, is said to have bought those deeply discounted bonds from an offshore fund keen to exit the position, market sources said. Such bonds worth Rs 20 crore changed hands in the secondary market amid market speculation that company might face liquidity pressure and needs immediate funds to improve its financials.
“The telecom company has too tried to raise money from overseas market but has not yet finalised with tepid global investor confidence,” said an investment banker, who has dealt with the company The telecom company has been losing market share. “One fund was desperate to exit Vodafone’s local bonds as it was sensing trouble in the company,” said a dealer with the knowledge of the matter.
Distress sales of bonds have been gaining ground past few months when troubled home financier Dewan Housing Finance and Reliance Capital bonds changed hands at the elevated yields 67 per cent and 96.8 per cent. In terms of pricing Vodafone Idea bonds were traded at Rs 54.28 compared to its face value at Rs 100 apiece.
The bonds were sold in January nearly three years ago. In August CARE Ratings. downgraded Vodafone Idea’s non-convertible debentures to A from CARE A+ with a negative outlook. “The revision in ratings assigned to the bank facilities/instruments of Vodafone Idea Limited (VIL) is on account of further deterioration in the operational and financial performance of the company during Q1FY20,” the rating company said.
After the merger between Vodafone and Idea Cellular on August 31, 2018, Vodafone Idea started as India’s No 1 telco by customer market share – over 40 per cent – and revenue market share – over 35 per cent. Vodafone Idea chief technology officer Vishant Vora said that the telco possesses plenty of spectrum and is not in a desperate need to go out and get spectrum in the upcoming auction, ET reported on October 2. The telecom industry is in a serious debt situation and most of the debt is towards the government on spectrum that has been acquired so far.
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