DIAL plans to tap overseas, domestic debt markets

"Before moving forward with the issuance, the company is assessing international market conditions and reviewing their existing bond covenants to ensure they have the required flexibility for refinancing," said a source.

These bankers have presented potential options for a dollar bond issue, and the GMR group is working with international legal experts to determine if the existing bond covenants allow for full flexibility for refinancing, the source said.

The company plans to use the proceeds from this bond to refinance a $450 million 6.25% note due in October 2025. The was issued by DIAL's offshore special purpose vehicle, India Airport Infra, which is an orphan financing vehicle with no legal linkage to DIAL. In November 2023, Fitch Ratings changed the ratings and outlook on India Airport Infra's senior secured notes to 'B+' from 'BB-' to positive.

"The positive outlook is based on Fitch's expectation that DIAL's deleveraging will pick up in the next 18-24 months after it completes its current capex cycle," the rating agency had said. "The reduction in leverage will be supported by growth in passenger traffic, resolution of key pending regulatory issues and a tariff hike that we expect to be delayed by 12 months."

The GMR Group, through GMR Airports, is the largest shareholder in DIAL with a 64% stake, with Fraport AG Frankfurt Airport Services Worldwide (Fraport) holding 10% and the Airport Authority of India holding 26%.

To raise ₹800 cr in India
The airport operator is undertaking a capital expenditure programme of ₹12,616 crore, including a cost overrun of ₹1,066 crore, to increase passenger capacity by 34 million, as per an report. By February 2024, they had spent about ₹10,900 crore and completed 98.9% of Phase III expansion. The project is expected to be operational before April 2024, ICRA has said in its report.

The cost overrun of ₹1,066 crore is anticipated due to changes in scope, which can be funded partially through additional debt of ₹800 crore and the rest through internal funds. DIAL is raising ₹800 crore through NCDs for this purpose.