GMR Hyderabad International Airport Ltd (GHIAL) is planning to raise Rs 1,250 crore through non-convertible debentures (NCDs) from the domestic market to partially repay foreign exchange loans amounting to $300 million.
GHIAL’s dollar-denominated senior secured notes (aka bonds), which carry a coupon rate of 5.37 per cent, are due for repayment in April 2024. These would be partly refinanced with 10-year NCDs at a lower rate of interest. The ‘AA’-rated NCDs would help improve GHIAL’s debt maturity profile, rating agency Icra said in a statement.
Icra also upgraded the outlook on various financial instruments from “stable” to “positive”, while factoring in the expected improvement in GHIAL’s credit profile, supported by build-up in non-aeronautical (non-aero) revenues to the pre-Covid level in FY2023.
The rating agency flagged the refinancing risk of overseas bonds including those with a bullet repayment falling due in February 2026. But it said the company would be able to refinance bonds in a timely manner due to a strong business risk profile, exceptional financial flexibility on account of a long residual concession life and healthy projected cash flows.
Icra said GHIAL remains exposed to asset concentration risk. The variation in passenger traffic due to economic cycles that often lead to a temporary decline in arrivals and departures have been offset by covering up the shortfall in the next regulatory period, albeit with a lag.
A substantial reduction in project execution risk is expected, with commercial operations likely to start in Q4FY23 for the new terminal. The rating continues to derive strength from the regulatory framework, which allows an efficient cost recovery from user tariff.
GHIAL’s monopolistic position in its region of operations significantly mitigates the revenue concerns.