India's Bharti Airtel, in talks to buy the African mobile operations of Kuwait's Zain for $9 billion (Dh33bn), has issued a term sheet to banks to raise up to $8.5bn in offshore loans to fund the deal, banking sources said.
The six-year offshore facility has four tranches and carries a blended average life of 4.75 years, with a margin ranging from 176 basis points to 179 bps over Libor, the sources said.
Previously, Bharti was said to be looking for a $9bn facility, which also included an onshore rupee tranche.
Bankers familiar with the deal said that the all-in pricing is below all expectations, which ranged from 200 bps to 250 bps above Libor. Bharti, which is India's largest cellular carrier, is in talks to buy Zain's operations in 15 African countries. Exclusive negotiations are scheduled to lapse on March 25.
A banker familiar with the deal said that Bharti opted to drop the onshore tranche of its loan due to the strong response from offshore lenders. By raising the facility all in US dollars, the borrower also minimises execution risks and the time needed to complete the financing, the same banker said.
Barclays Capital, Citigroup, Standard Chartered Bank and State Bank of India are expected to underwrite larger amounts than other banks.
Banks have until today to respond to the borrower, while documentation is expected to be completed by Friday. A Bharti spokesman declined comment.
Banks have been offered a 60 bps fee to underwrite $650m or more. Around 11 other shortlisted banks also received the term sheet, including: ANZ, Bank of America Merrill Lynch, Bank of Tokyo-Mitsubishi UFJ, BNP Paribas, Credit Agricole CIB, DBS Bank, HSBC, JPMorgan, Royal Bank of Scotland and Sumitomo Mitsui Banking Corp.