BackDIAL raises $288 mn selling 7-year bonds in Asia and Europe
The sale received robust demand from investors, who bid for $5 billion of the securities
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Mumbai: Delhi International Airport Pvt. Ltd (DIAL), the company that manages New Delhi’s Indira Gandhi International Airport, has raised $288.75 million by selling bonds maturing in seven years to investors in Asia and Europe, bankers to the deal said.
The sale received robust demand from investors, who bid for $5 billion of the securities, ensuring the firm raised the money at a much cheaper yield of 6.12% relative to the initial pricing guidance of 6.5%, the bankers said.
DIAL raised the funds to refinance an earlier round of external commercial borrowings, which are coming up for repayment in the next few months.
A DIAL spokesperson declined to comment. In an email response on 12 January, the company spokesperson had acknowledged that DIAL was meeting investors in an attempt to raise money abroad.
DIAL, controlled by GMR Infrastructure Ltd, has debt of around ₹ 5,800 crore (around $940 million), Madhu Terdal, group chief financial officer at GMR, said in a interview in July. The latest numbers are not available because this company is privately held; the parent company’s debt at the end of the September was ₹ 40,111 crore.
DIAL has moved swiftly to take advantage of robust market conditions and abundant liquidity in international debt markets. Neville Fernandes, head of debt capital markets origination at Citibank India, said.
“Refinancing continues to an important theme in 2015, with DIAL being the first corporate high yield bond to be issued in Asia, including India. This will help DIAL reduce interest costs, extend their debt maturities, benefit from operational flexibility and deepen their capital structure," Fernandes said in an email.
Citibank NA, Standard Chartered Plc, HongKong and Shanghai Banking Corp. Ltd (HSBC) and JPMorgan Chase & Co. were the bankers to the issue.
“The extremely strong reception of this market opening debut transaction in the high yield space reflects the marquee nature of the underlying asset and the strong fundamentals of the Indian credit story," said Chetan Joshi, head of debt capital markets, India at HSBC.
Government-owned Airports Authority of India (AAI) is a 26% shareholder in DIAL.
The bond has been in the wings for two weeks after roadshows started on 12 January. DIAL decided to go ahead with the issue as global investor sentiment had improved after the European Central Bank (ECB) last week unveiled a higher-than-expected bond-buying programme.
“This issue was subscribed by institutional investors and private banks alike and demand was strong mainly as so far this year there have been no issues from China. India’s economy is doing well and that has attracted many buyers," said one of the bankers, adding that the fact that a government agency owned a substantial stake in the airport also helped attract investors. This banker didn’t want to be named.
On Thursday, ECB president Mario Draghi announced a $67 billion per month bond-buying programme starting in March until September 2016, in an attempt to revive the sagging European economy.
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