Moody's Investors Service has assigned a Baa3 rating to the proposed senior, unsecured Swiss Franc denominated notes issued by Bharti Airtel International (Netherlands) BV. The notes are issued under the irrevocable and unconditional guarantee of Bharti Airtel (Bharti, Baa3 stable). The outlook on the ratings is stable.

Bharti will use the proceeds for refinancing purposes and therefore the transaction will be leverage neutral. The issue will diversify currency risk away from the US Dollar and further extend its maturity profile, both of which are credit positives.

This follows senior notes issuances totaling Euro 1 billion at the end of 2013 and January 2014, where the entire proceeds were used for refinancing purposes.

''Bharti's Baa3 rating continues to be supported by strong performances from its wireless operations in India, where it maintains its market leading position with record number of subscribers,'' says Laura Acres, a Moody's senior vice president.

''At the same time, concerns exist regarding its exposure to the risk of changes to the regulatory and political environments in some of the African countries in which it operates, and also the company's relatively high leverage,'' adds Acres, also Moody's Lead Analyst for Bharti.

Bharti's financial metrics are improving with absolute debt reduction and strong EBITDA growth from its India business. Adjusted debt/EBITDA for the last twelve months (''LTM'') ended in December 2013 fell to about 2.9x from September 2013's 3.1x. Reported operating cash flow in the nine months ended in December 2013 reached INR244.2 billion, which already exceeds the FY2013 full-year figure and is on pace to post record profits for the current fiscal year.

"We expect Bharti to maintain its leading position in India after securing important spectrums at the recently completed 2G spectrum auction. Whilst total cost of INR 185 billion exceeded our expectations, this was an important victory for Bharti as it effectively hedged its future renewal risk for spectrum in key circles in Delhi and Kolkata, where they will expire in 2014. Bharti has also significantly strengthened its competitive position in Mumbai, after securing 11 MHz of spectrum in the auction and added 3 million subscribers following the acquisition of Loop Mobile (unrated), making it the largest operator in the city based on subscribers. We believe Bharti will be able to fund the upfront spectrum payments (about Rs 54 million) and acquisition cost with existing funds," it said.

The rating outlook is stable, based on the expectation that Bharti will continue to grow its core Indian and African wireless businesses and that the group will continue to deleverage on both an absolute and relative basis.

The rating may experience upward pressure should Bharti's overall credit profile continue to strengthen; in particular Moody's would like to see Bharti reduce consolidated adjusted debt/EBITDA to below 2.0x and for consolidated, adjusted free cash flow to debt to exceed 10%.

Downward pressure could arise should competition intensify in any of its key markets, but particularly for the Indian wireless business, such that its key operations and/or subsidiaries report materially declining margins, or Bharti fails to continue with its deleveraging strategy. Moody's would seek evidence of this trend with consolidated adjusted debt/EBITDA remaining above 3.0x, consolidated free cash flow/debt remaining below 5%, or EBITDA margins falling below 35%.

Furthermore, any unexpected regulatory developments in some of Bharti's key markets will also be negative for the rating.

Shares of the company gained Rs 1.1, or 0.37%, to trade at Rs 300.90. The total volume of shares traded was 88,756 at the BSE (Thursday).