Monday, January 21, 2019

Government may issue NCDs of up to Rs 29,000 cr to repay Air India's outstanding working capital loans

New Delhi: The Centre may issue Non-Convertible Debentures (NCD) of up to Rs 29,000 crore to repay Air India’s outstanding working-capital loans that have been taken over by the government as part of the debt-laden carrier’s financial restructuring.

One of the proposals to quickly lighten the debt load at the national carrier is to issue the NCDs from Air India Assets holding (AIAHL), the company formed to take away the airline’s outstanding working-capital loans. The NCDs will come with sovereign guarantees.

“A plan to transfer the debt to a subsidiary, complete with the approvals from the lender banks, is taking a lot of time as various banks have to agree,” said a senior government official, who did not want to be named. “AIAHL can issue the NCDs to raise money and repay the outstanding loans to banks… That is being considered.”

The NCDs could reduce the debt servicing costs, currently between 9% and 11%, by up to 300 basis points besides speeding up the process to transfer the loan from the books of Air India.
21/01/19 Mihir Mishra/Economic Times
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