India telecoms company Idea Cellular closed a US$260mn Finnvera-supported export credit facility in September last year.

The transaction – arranged by HSBC – marked the first time this Indian company has tapped the export credit market, in a move designed to diversify away from its bilateral and syndicated facilities.

The deal was also one of the largest transactions ever supported by the Finnish export credit agency in India.

Idea Cellular is India’s fourth largest mobile operator. The purpose of this loan is to finance ongoing purchases of telecom equipment and services from Nokia Siemens Networks (NSN) – a leading global provider of mobile solutions.

“As the company continues its rapid pan-India expansion, we expect export credits to constitute a recurrent source of funding for them,” says Christopher Green, head of export finance, Asia at HSBC.

“HSBC’s role as sole arranger demonstrated the bank’s capacity, especially in last year’s difficult market, to extend its balance sheet for the strategic transactions of its core clients,” Green adds.

The 10-year facility is divided into two tranches, with one tranche benefiting from a fixed-rate CIRR financing provided by Finnish Export Credit (FEC), and another tranche on floating rate terms. This flexible structure allows the borrower to maximise funding and manage its interest rate exposure.

The borrower is able to take advantage of an attractive all-in cost thanks to FEC’s involvement as lender of record and fixed interest rate provider, as well as an attractive annualised premium rate from Finnvera – instead of an upfront charge.

The deal benefits from an extended tenor to meet the Reserve Bank of India’s requirements of a minimum five year average life despite amortising profile.

Tuukka Andersén, vice-president, head of underwriting, at Finnvera comments: “The Finnvera-backed financing contributed to one of our main exporters, Nokia Siemens Networks being able to continue their considerable deliveries of telecom equipment and services as a part of Idea’s expansion of their GSM-network to the whole of India.

“Finnvera is very pleased to be able to support both Idea and NSN in the fast-growing Indian telecom market. We highly appreciate the direct contact with Idea ever since this transaction was introduced to us and the close cooperation with them throughout the whole due diligence process. We also had excellent cooperation with HSBC, who is the sole arranger and Finnvera’s guarantee holder in this transaction.”