The proposed issuance of masala bonds by DIAL, which operates the international airport in the national capital, would help in raising funds without incurring currency risk and also lengthen its debt maturity profile, according to credit rating agencies.
Moody’s Investors Service and S&P Global Ratings today assigned rating for DIAL’s proposed masala bonds and the US dollar bonds issues.
While Moody’s has given ‘Ba2’ rating, S&P Global has assigned ‘BB’ rating. Both have a stable outlook. The ratings indicate higher credit risks.
Delhi International Airport (P) Ltd (DIAL) is a three-way joint venture with majority-owned by GMR Infrastructure.
Moody’s Investors Service said the issuance of rupee-denominated masala bonds would assist DIAL to raise funds without incurring currency risk and diversify its debt funding base beyond local bond markets, bank loans and US dollar denominated bonds.
“DIAL will apply the proceeds of the Masala and USD bond issuance to fully refinance an existing local currency bank term loan facility of around Rs 30 billion and USD External Commercial Borrowing Facility of around USD 84 million respectively,” Moody’s said in a release.
The corporate family rating and the rating of its existing USD 288.75 billion senior secured bond remain unchanged at Ba2, it added.
According to Moody’s, Ba2 ratings takes into account DIAL’s strong market position as the international gateway to India’s landlocked capital and the expansion programme over the next three to five years while the stable outlook reflects the company’s adequate liquidity.
In a separate release, S&P Global Ratings said the proposed refinancing would help lengthen DIAL’s debt maturity profile and remove existing maintenance covenants.
“We also expect the company’s planned hedging and earnings in foreign currency to mitigate currency risk. DIAL intends to refinance in part or in full its existing amortising debt with bullet bonds with a maturity of more than five years.
“The company also intends to hedge the entire principal on the foreign currency borrowings and 25 per cent of the interest payment,” it said.
Further, S&P Global noted the issue rating is subject to review of the final issuance documentation.