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Air India Assets plans 22,000 crore bond sale to refinance debt

  • Air India Assets is aiming to raise 22,000 crore ($3.2 billion) and has sought fee bids from bankers on Wednesday
  • Out of the total, the Air India Assets plans to raise 14,500 crore through notes that will have a sovereign guarantee

Mumbai/New Delhi: Air India Assets Holding Ltd., a special purpose vehicle that holds part of the state-owned carrier’s debt and assets, is planning its first rupee-denominated bond sale to refinance some debt of the airline.

Air India Assets is aiming to raise 22,000 crore ($3.2 billion) and has sought fee bids from bankers on Wednesday, people familiar with the matter said. Out of the total, the company plans to raise 14,500 crore through notes that will have a sovereign guarantee while the nation’s government will fully service the remaining.

The SPV was set up by the government last year, and about 29,500 crore of Air India Ltd.’s debt was transferred to it to ease the ailing carrier’s debt burden and to make it easier for Prime Minister Narendra Modi to sell a stake in it. The airline, with a total debt of $8.4 billion, lost 7635 crore in the year to end-March, according to provisional estimates.

Air India, which is surviving on a 30,000 taxpayer-funded bailout, has failed to maintain its market dominance as a slew of budget carriers including InterGlobe Aviation Ltd. and SpiceJet Ltd. started to offer ultra-cheap, on-time flights more than a decade ago.

The national airline had earlier sought fee bids from bankers as it planned to raise 7000 crore via notes guaranteed by the government by 31 March. But the sale didn’t go ahead as investors were worried that planned privatization of Air India could dilute the sovereign backing for the notes.

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