New Delhi: In a bid to check high borrowing costs for Air India Asset Holding (AIAHL), the government has exempted the special purpose vehicle from a clause that makes sovereign guarantee on government bonds non-transferable in case of change of ownership of the company.
AIAHL, which houses `29,464 crore of the national carrier’s debt, is looking to raise around `22,000 crore through government-backed and government-serviced bonds.
A senior government official said the ministry of finance waived off the condition as it would have increased the cost of borrowing on government-guaranteed bonds. Under this condition, the sovereign guarantee ceases to exist if the ownership of the entity is changed.
Recently, Food Corporation of India (FCI) was extended a similar exemption after its `8,000-crore bond issue in February evoked a poor response. While the food procurement agency could only raise one-third of the proposed amount, the coupon rate was also higher than the benchmark rates.
“To avoid a similar situation, the same exemption will be granted to bonds floated by AIAHL,” the official said.
08/08/19 Arun Nayal/Fiancial Express
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AIAHL, which houses `29,464 crore of the national carrier’s debt, is looking to raise around `22,000 crore through government-backed and government-serviced bonds.
A senior government official said the ministry of finance waived off the condition as it would have increased the cost of borrowing on government-guaranteed bonds. Under this condition, the sovereign guarantee ceases to exist if the ownership of the entity is changed.
Recently, Food Corporation of India (FCI) was extended a similar exemption after its `8,000-crore bond issue in February evoked a poor response. While the food procurement agency could only raise one-third of the proposed amount, the coupon rate was also higher than the benchmark rates.
“To avoid a similar situation, the same exemption will be granted to bonds floated by AIAHL,” the official said.
08/08/19 Arun Nayal/Fiancial Express
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