The GMR Group has initiated talks with lenders to refinance about ₹4,000 crore debt owed by the two operational subsidiaries that run the Goa and Hyderabad airports, said people aware of the matter.
Of this, ₹2,500 crore will be for GMR Hyderabad International Airport Ltd (GHIAL), to refinance a portion of the debt raised for the expansion of the Rajiv Gandhi International Airport in Hyderabad. Rest ₹1,500 crore will be for refinancing the debt of GMR Goa International Airport Ltd (GGIAL), which operates the recently inaugurated Manohar International Airport at Mopa in north Goa.
It’s not decided if the borrowing will be through bank loans or bonds, said the people cited above. The GMR Group did not respond to queries.
“They are looking to refinance a large portion of the project finance taken from a consortium of private and public sector banks to build these assets,” said one of the persons cited above. “They expect to get a better rate now that these assets are operational.”
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 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 $300 million of bond repayments due in April 2024 and another debt maturing in February 2026. In December, GHIAL had partially refinanced its $300 million, 5.375% notes with domestic non-convertible debentures of ₹1,150 crore at a lower rate of interest with a tenor of 10 years, as per the March 1 ICRA note.
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