Wednesday, February 27, 2019

Air India seeks to raise Rs 7,000 crore via domestic bonds

Air India plans to raise up to Rs 7,000 crore through one of the largest domestic bond sales this year to repay its maturing loans and restructure stressed debt, three people with the direct knowledge of the matter said.

“The company has received an in-principle approval from the government, which will guarantee the proposed bonds,” one of the persons told ET.

The national carrier’s bonds are expected to have a maturity of 10 years. About 10 financial institutions — mostly banks — have submitted bids to arrange the proposed bond sale, which is likely to be completed by March-end, the sources said.
“Air India Ltd is planning to diversify its funding sources through domestic bond market by private placement of bonds, which will be backed by guarantee of the government of India,” the company said in the Request for Proposal inviting bids from prospective bond sale arrangers.
Axis Bank, HDFC BankNSE -0.70 %, ICICI Bank, ICICI Securities PD, Standard Chartered Bank, IndusInd Bank, and Yes Bank are among the entities that have expressed interest to don the role of arrangers, the sources said. Email queries sent to them remain unanswered until publication of this report. Standard Chartered Bank and Yes Bank declined to comment.
Air India is expected to use the proceeds both for refinancing and restructured stressed debt, said the person quoted earlier.
The federal support will improve credit rating of Air India bonds that will be seen as quasi-sovereign papers with triple-A grade. With the government owning responsibility to repay interest and principals, the airline will attain ‘Structured Obligation’ (SO) tag along with the top grade.
27/02/19 Saikat Das/Economic Times
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