Air India seeks to refinance its $1.15 bn loan from IDBI

Mumbai: The board of flag carrier Air India will on 19 January choose among ICICI Bank Ltd, State Bank of India (SBI) and Standard Chartered Plc to refinance a $1.15 billion (Rs5,187 crore) loan taken from a consortium led by IDBI Bank Ltd.
“The loan would be a rupee loan and would be backed with a sovereign guarantee,” said an official of the civil aviation ministry. “Air India is looking at raising a loan with an average maturity of 12 years. The carrier is looking at an interest rate of 9%.”
A sovereign guarantee gives banks an assurance that the government will repay a loan if the borrower is unable to do so.
The development was confirmed by an Air India executive. Both officials spoke on condition of anonymity. Officials at the three banks declined to comment on the matter.
The state-owned firm had borrowed the money to buy 21 Airbus SAS planes, spare engines, simulators and workshop tools.
Originally, Air India had decided to furnish only one type of security instead of two—either a sovereign guarantee offered by the government, or aircraft as collateral. The airline typically used to offer both for long-term loans.
14/01/11 P.R. Sanjai/Live Mint

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Categories: Air India Jan 2011