Delhi International Airport Limited (DIAL) is looking to raise around $290 million through offshore bonds for which roadshows commenced on Monday in Singapore, London and Hong Kong, according to a source.
The company hitting the offshore bond markets for the first time is looking to raise funds to refinance earlier loans, sources said. “Roadshows are being held this week. The issue can be expected next week at the earliest and if that happens, it could possibly be the first offshore issue of the year,” said the source.
Standard & Poor’s ratings services has assigned its ‘BB’ (stable outlook) long-term corporate credit rating to DIAL. “We also assigned our ‘BB’ long-term issue rating to the company’s proposed US dollar-denominated senior secured notes,” S&P said in a press release. “The rating reflects our expectation that DIAL’s cash flow adequacy will be weak for the next 18 months as tariffs are re-set,” the release said.
The S&P release stated DIAL’s financial position will materially weaken in fiscal 2016 (ending March 31, 2016) from the current healthy level, once the second regulatory period comes into effect. The Airports Economic Regulatory Authority is likely to significantly cut tariffs as per the principles of the first tariff order, effective April 1, 2015, it said.
“The materially weaker credit profile of DIAL’s major shareholder, GMR Infrastructure, is unlikely to negatively affect DIAL’s credit profile, in our view,” the press release said. GMR Infrastructure’s ability to control the strategy and cash flows of DIAL is significantly restricted under Airports Authority of India’s shareholder’s agreement and by the operation, management, and development agreement with AAI. AAI has a 26% shareholding in DIAL, participates at the board level, and needs to approve any change in strategy or related-party transactions, it added.
Moody’s has also assigned a provisional (P) Ba1 rating to DIAL’s proposed bonds, according to a press release. Arnon Musiker, a vice president and senior credit officer of Moody’s, expects the Delhi airport to benefit from increased travel demand in the country.