Delhi International Airport Limited (DIAL) has raised $288.75 million through 7-year dollar-denominated bonds at a coupon rate of 6.125%, said sources. “This is the first high-yield issuance out of Asia. Also, it is the first bond from the infrastructure project category in India and among one of the few infrastructure project bonds ever to be done,” said a source.
Citi Bank, Standard Chartered, HSBC and JP Morgan were the joint book runners for the issue, the source said.
DIAL has tapped the offshore bond markets for the first time to raise funds, according to sources who added the funds will be used to refinance its earlier loans.
Two weeks ago, DIAL had held road shows in Singapore, London and Hong Kong for its bond issue. Standard & Poor’s had assigned a ‘BB’ (stable outlook) long-term corporate credit rating on DIAL.
DIAL’s bond issue is the second offshore issuance in 2015 after Reliance Industries’ $1 billion issue last week. Bond arrangers are confident of a healthy year for offshore issuances and some are even expecting the figure to cross $20 billion this year compared with the record $18.6 billion in 2014.
Moody’s said in a report on Tuesday that Indian high-yield bond covenants score well on a global scale. Scored on a weighted average of six key risk areas, the bond deals have stronger covenant protections than those in other regions, including the US, Europe and the broader Asian region, it added. “We expect Indian companies with natural hedges against currency risk to lead in bond issuance in 2015,” said Philipp Lotter,
Moody’s managing director responsible for corporate ratings in India and ASEAN, in the report. It also said that the lower interest rates on foreign-currency borrowings — compared with rupee-denominated borrowings — also make it cheaper for companies with natural hedges against currency fluctuations to issue offshore bonds, the report stated.
“As the environment in India improves, more issuers will raise funds to invest in projects in India rather than make acquisitions abroad,” the report added.