DIAL looks to raise $350 mn through dollar bonds

bond-gettyMumbai: The GMR Group-controlled Delhi International Airport Ltd (DIAL) is looking to raise at least $350 million by selling 10-year dollar bonds to investors across the world as it seeks to expand operations in what already is the busiest airport in the country.

A clutch of banks led by HSBC, Deutsche and JP Morganare helping the company market the bond to investors in Hong Kong, Singapore, followed by London and New York later this week as it seeks to raise funds from a diverse set of clients.

“It is 10-year bond for $350 million. It is only a roadshow announcement. The pricing will be done depending upon market conditions. The proceeds will be used to part finance the DIAL expansion only,” a GMR group spokesperson said.

“The road shows for this issue are starting this week and if market conditions are ok, we might price the bond sometime next week. The company plans to raise the money to fund its expansion plans,” said a person familiar with the matter.

DIAL is planning to expand Terminal 1 and Terminal 3 of the airport and also construct a new runway and taxiways. The current capacity of the airport is about 70 million, which is likely to be breached this year. The plan is to expand capacity to 100 million. Global credit rating agency Moody’s has assigned a Ba2 rating to the proposed 10-year bonds.

“The proposed bond’s Ba2 senior secured rating reflects the airport’s strong market position and robust passenger traffic, which is likely to grow at a high single-digit percentage per annum over the next 18 months under Moody’s base case scenario,” Moody’s said.

The rating agency estimates that the funds will help DIAL to increase passenger handling capacity to up to 100 million passengers per annum, which the company expects will cost up to ?9,800 crore over a three-year development phase.

“Proceeds from the proposed bond issuance — which the management intends to retain as cash on DIAL’s balance sheet — will further strengthen DIAL’s liquidity position and reduce the additional funding it will need to complete the planned expansion,” Moody’s said.