GHIL Enters Into Agreement to Raise $300 Million Bond Issue

Jan. 28—NEW DELHI — GMR Group-operated Hyderabad International Airport Limited (GHIAL) on Wednesday said that it has entered into an agreement to raise $300 million from international bond market, proceeds of which will be utilized as capital expenditure for the expansion of the airport.

"GHIAL has entered into a Purchase Agreement to issue and allot US$ 300 Mn (million) 4.75% senior secured notes of 5 year tenure (the "Notes"). The proceeds from the Notes will be used towards the capital expenditure with respect to the master plan (expansion) of the Rajiv Gandhi International Airport at Hyderabad, increasing the capacity of the Airport to 34 Mn Passengers Per Annum," GMR Group said in a statement.

It must however be noted that rating agency Moody's Investors Service had last week assigned Ba2 rating to GMR Hyderabad International Airport Limited's (GHIAL) $300 million proposed bond issue, suggesting a substantial credit risk to the loan facility.

The rating agency also affirmed HIAL's Ba2 corporate family rating while labeling its outlook as negative. Moody's had during June last year downgraded HIAL's corporate family rating to Ba2 after placing the airport's Ba1 rating to review in March.

According to Moody's Investors Service, obligations rated Ba2 are judged to have speculative elements and are subject to substantial credit risk.

"The negative outlook reflects potential downside risk over the next 12-18 months, which could stem from a slower than expected recovery in the airport's traffic, an unfavorable or delayed tariff decision from the upcoming reset, or delays in securing the additional funding required to complete its expansion," Moody's added in a statement.

Major airports across the country, including HIAL, have seen a fall in passenger demand and revenue due to the ongoing covid-19 pandemic.

Indian aviation sector, including airports, are expected to lose a combined $ 6-6.5 billion during 2020-21, according to data from aviation consultancy firm Capa India.

Further the total number of air passengers are expected to fall to 50-60 million, including less than 10 million international passengers, during 202-21, down from 205 million air passengers, including 65 million international passengers, during 2019-20.

"The offering through GHIAL reinforces our ability to raise funds from the International Bond Markets and reflects our continued effort to create value for our investors and raise capital for growth," GMR Group's Corporate Chairman Grandhi Kiran Kumar said in a statement.

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