GMR to raise USD 350 million via bonds for Delhi airport expansion

HYDERABAD, May 7: Delhi International Airport Ltd, a

GMR group company, plans to raise USD 350 million through 10

year senior secured bonds for the airport expansion programme

and Moody’s has assigned a Ba2 rating for the proposed bonds.

Proceeds from the proposed bond would be used to help

fund a major expansion to increase the passenger handling

capacity of Indira Gandhi International Airport to up to 100

million passengers per annum, which the company expects would

cost up to Rs 98 billion ( Rs 9800 crore) over a three-year

development phase, Moodys said.

“Moody’s Investors Service has assigned a Ba2 senior

secured rating to Delhi International Airport Limited’s (DIAL,

Ba2 stable) proposed 10 year senior secured bond of up to

USD350 million,” the rating agency said.

The proposed bond’s Ba2 senior secured rating reflects

the airport’s strong market position and robust passenger

traffic, which would likely grow at a high single-digit

percentage per annum over the next 18 months under Moody’s

base case scenario, it said.

The rating agency however, said Delhi Airport’s ratings

are constrained by its planned capacity expansion, which would

exert downward pressure on its financial metrics, the evolving

regulatory environment in India and its obligation to pay

45.99 per cent of its revenue to the Airports Authority of

India as a concession fee.

After accounting for the proposed USD notes, Moody’s

expects that DIAL’s funds from operations/debt would remain

weak over the next 2-3 years, with a very limited buffer above

the minimum tolerance level of 3-4 per cent Moody’s said.

Moody’s base case financial projections assume that

aeronautical tariffs would stay at the current level during

the third regulatory period between April 2019 and March 2024

and there was no material uplift to the airport’s financial

position arising from its arbitration proceedings with the

Airports Authority of India on the calculation of the 45.99

per cent concession fee.

Despite its elevated leverage position, DIAL’s liquidity

position is strong, with cash holdings and short-term

investments totaling Rs 2600 crore as in March 2019 and these

assets provide the airport with additional financial

flexibility over the next 12-18 months, the agency opined.

DIAL is the concessionaire for Indira Gandhi

International Airport, under an Operations, Management and

Development Agreement, entered into in 2006 with the Airports

Authority of India. (PTI)