Delhi International Airport (DIAL), a joint venture between GMR Group and the Airports Authority of India, is looking to raise Rs 3,000 crore via the bond market, said three sources familiar with the matter.

“DIAL plans to hit the market to raise around Rs 3,000 crore through the bond market and is likely to meet bond arrangers to finalise details”, said a banker who did not wish to be identified. A spokesperson for DIAL declined to comment on the matter.

Bankers indicated the company will use the funds to refinance its existing debt. According to Standard and Poor’s Rating Services (S&P), DIAL’s debt as on March 31, 2014 was Rs 5,565 crore, and the debt-ebitda ratio stood at 4.4X.

Annual revenue growth was 21.1% and revenue was Rs 3,923 crore. ebitda was Rs 1,259 crore and ebitda margin 32.1%.

According to GMR Infrastructure’s FY14 annual report, “DIAL has accumulated losses of Rs 969.86 crore, thus resulting in substantial erosion of its net worth as at the year end. DIAL has earned a net profit of Rs 410.83 crore and has met all its obligations as at March 31, 2014.”

S&P says it expects DIAL’s revenue concentration in the aero business to reduce over the next two years from the current level of about 70%. “We anticipate that the improvement will be driven by growth in commercial property development. Its profitability is also likely to remain weak because it is required to share about 45.99% revenue with the Airports Authority of India (AAI)”, S&P notes in a report.

In January, DIAL had raised $288.75 million through a seven-year dollar-denominated bond issue at a coupon rate of 6.125%. DIAL’s bond issue was the first high-yield issuance out of Asi, according to market participants.

Yields on domestic bonds have hardened somewhat on concerns that inflation could rise in the wake of weak monsoon and also because the RBI indicated it had front-loaded the rate cut, indicating there might be a long pause before the next reduction in the repo rate. Bond arrangers say AAA-rated public sector units will attract coupon rates in the range of 8.55-8.60% for a 10-year paper under current market conditions.

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