PANAJI:According to those with knowledge of the situation, the GMR Group has started negotiations with lenders to refinance the about INR 4,000 crore in debt that the two operating subsidiaries that manage the airports in Hyderabad and Goa owe.
A portion of the debt raised for the expansion of the Rajiv Gandhi International Airport in Hyderabad would be refinanced with the help of INR 2,500 crore, which will go to GMR Hyderabad International Airport Limited (GHIAL). The remaining INR 1,500 crore would be used to refinance the debt of GMR Goa International Airport Ltd (GGIAL), the company in charge of running the recently opened Manohar International Airport in Mopa, north Goa. According to the aforementioned sources, it is unclear if the borrowing will take the form of bonds or bank loans.
Flights started at Mopa airport in January. Phased operations have begun at a new Hyderabad airport terminal. That prompted rating agencies to issue a favourable outlook for both units in recent weeks, with project execution risk declining. Crisil upgraded the credit rating of GGIAL earlier this month to BBB+ from BBB- with a stable outlook.
“Rating action is on account of the commencement of airport operations and traction of traffic operations, leading to reduction of implementation and offtake risk,” a Crisil note said. Similarly, ICRA reaffirmed the credit rating of GHIAL at AA with a positive outlook earlier this month. “GHIAL has started opening the new terminal in a phase-wise manner from Q2 FY2023, thereby reducing the project execution risk substantially,” it noted.
Rating agencies have also taken a favourable view of the companies in light of the GMR Group’s track record in operating airports such as the country’s busiest one in New Delhi. In the case of Mopa airport, Crisil highlighted demand risk due to this being the coastal state’s second one. The Dabolim facility, 60 km away, continues to operate.
“This exposes GMR Goa to competition risk for passenger volumes and hence can impact demand and pricing for non-aero and commercial property revenue streams,” the rating agency noted. In the case of Hyderabad airport, there is continued project offtake risk as it’s in the middle of a massive expansion to increase capacity from 12 million to 34 million passengers a year, ICRA noted.
The company has USD 300 million of bond repayments due in April 2024 and another debt maturing in February 2026. In December, GHIAL had partially refinanced its USD 300 million, 5.375% notes with domestic non-convertible debentures of INR 1,150 crore at a lower rate of interest with a tenor of 10 years, as per the March 1 ICRA noted.
A subsidiary of GMR Airports Limited and a step-down subsidiary of GMR Airports Infrastructure Limited, formerly known as GMR Infrastructure Limited (GIL), GMR Hyderabad International Airport Limited (GHIAL) announced that it had effectively raised funds on March 13, 2023, through the issuance of 10 years Listed, Rated, Redeemable, Secured Non-Convertible Debentures (NCDs) for INR 8.40 billion through a private placement. On BSE Limited, the NCDs will be listed.