AAI may halve borrowing plan, roots for bonds

The Airports Authority of India (AAI) is likely to trim its borrowing plan, picking up debt to the tune of only Rs 600 crore in the next four months as compared to the Rs 1,200 crore approved by the authority’s board recently.
AAI is also making another bid to win approval from the finance ministry for floating tax-free bonds to the tune of Rs 5,500 crore. According to highly-placed civil aviation ministry sources who do not wish to be identified, the Authority is keen to drop its current borrowing plan if North Block approves issue of tax-free bonds.
The civil aviation ministry is backing AAI’s proposal for tax-free bonds and it is expected that the finance ministry will have a fresh look at it, the sources said. In the meanwhile, the Authority will borrow only the minimum quantum of funds required, spreading even the trimmed-down target of Rs.600 crore to several installments.
Last Wednesday, the AAI board approved borrowing of Rs.1200 crore for the remaining months of the current financial year. The funds are for investment in modernization and up-gradation of Chennai, Kolkata and a number of non-metro airports.
Since AAI is keen to meet most of the investments through internal resources, the actual borrowing would be only Rs 600 crore, the sources said. AAI has to keep its board updated on the actual borrowings and its deployment.
According to industry sources, AAI would be able to borrow at rates not higher than 8% for a three-year tenure since it has AAA rating.
25/11/09 Faizan Khan/Economic Times

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Categories: Airports Nov 2009