CRISIL downgrades Mumbai International Airport's loans
CRISIL has downgraded its rating on the project and ADF loans of Mumbai International Airport Ltd (MIAL) to 'CRISIL C' from 'CRISIL B'
New Delhi: Rating agency CRISIL has downgraded its rating on the project and airport development fund (ADF) loans of Mumbai International Airport Ltd (MIAL), it said in a report on Thursday.
"CRISIL has downgraded its rating on the project and ADF loans of Mumbai International Airport Limited (MIAL) to 'CRISIL C' from 'CRISIL B'. The rating continues on 'Rating Watch with Negative Implications'. The 'CRISIL C' rating on the company's ₹350 crore term loan against real estate deposits (RESD loans) and 'CRISIL A4' rating on its short-term bank facilities remain on 'Rating Watch with Negative Implications'," CRISIL said in the report.
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"Liquidity profile for MIAL has remained weak, due to delay in recovery of demand in airline passenger traffic post Covid-19 induced disruptions, and will lead to challenges in debt servicing in fiscal 2021," it added.
According to CRISIL, long-term debt instruments with C rating are considered to have very high risk of default regarding timely servicing of financial obligation, while instruments with B rating are considered to have high risk of default regarding timely servicing of financial obligations.
Meanwhile, A4 ratings for short-term debt are considered to have minimal degree of safety regarding timely payment of financial obligations. Such instruments carry very high credit risk and are susceptible to default.
MIAL, which has been severely affected by the ongoing covid-19 pandemic, has sought an extension in payment holiday on loans till March 2022 from its lenders.
The airport venture has also sought a reduction in interest rate for all loans apart from seeking additional term loans for the period ending March 2021, according to a recent Business Standard report.
The country's second busiest airport at Mumbai had earlier seen its passenger footfall drop by over 90% to 1.86 million during April-September period, primarily due to the impact of covid-19 pandemic on travel.
As things stand, the GVK Group controls 50.5% of MIAL’s shareholding, while Airports Authority of India (AAI) owns 26% and the remaining 23.5% is split between the two foreign partners—Bidvest and Airports Company South Africa (ACSA), which has a 10% stake.
Earlier in August, Adani Group acquired 74% stake in the Mumbai airport, buying out stakes of GVK Group, ACSA, and Bidvest Group. However, the transfer of shares to Adani Group is yet to be completed with pending approval from authorities.
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