Bharti Airtel on Saturday said it will pre-pay $1.5 billion debt with its subsidiary Bharti Airtel International (Netherlands). This will be done through the proceeds it obtained from a recent pre-IPO placement in its Africa unit.

In a regulatory filing to the bourses on Saturday, Bharti Airtel said the subsidiary has commenced a tender offer to purchase in cash $1.5 billion, 5.125 per cent Guaranteed Senior Notes which were due in 2023.

Saturday’s announcement comes close on the heels of Moody's Investors Service placing Bharti Airtel's rating on review for downgrade on low levels of profitability and expectation of weak cash flow. Moody’s had placed on review for downgrade the Baa3 issuer and senior unsecured rating of Bharti Airtel and the ratings on the backed senior unsecured notes issued by Bharti Airtel International (Netherlands) BV.

The pre-payment offer, Bharti said, has been made in order to “proactively manage its capital structure, reduce gross debt and leverage by acquiring the notes funded out of equity proceeds and also provide liquidity to the noteholders at a premium to the market”.

At a group level too, it continues to de-leverage and pursue its strategies towards trimming debt, it added.

“In line with this, it (the group) has been actively exploring various equity driven initiatives, including those previously announced regarding its Africa business, so as to proactively manage its balance sheet and capital structure to align them to the group’s core conservative philosophy,” Bharti Airtel said.

Airtel Africa (a UK incorporated arm of Bharti Airtel) is the parent of Bharti Airtel International (Netherlands).

Airtel Africa had made a successful primary equity issuance of $1.25 billion to six leading global investors, including Warburg Pincus, Temasek, Singtel, SoftBank Group and others.

“The proceeds of this equity issuance are intended to be used to reduce Airtel Africa’s existing debt of approximately $5 billion on the date of the announcement.”