Monday, 30th October 2017

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Air India bond issue a big draw

Bids of Rs 20,830 crore were the highest ever received for an yield-based bidding

  • Published 17.09.19, 12:49 AM
  • Updated 17.09.19, 12:49 AM
  • a min read
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The funds, raised at a lower rate of 6.99 per cent, will be used to partly repay Air India’s debt of over Rs 58,000 crore.

Air India Assets Holdings Ltd (AIAHL), a special purpose vehicle, has raised Rs 7,000 crore through a bond issue, which was subscribed nearly three times.

AIAHL had come out with its maiden bond issue for Rs 1,000 crore with an option to retain an additional subscription of up to Rs 6,000 crore. The bonds are fully-backed by the government.

The funds, raised at a lower rate of 6.99 per cent, will be used to partly repay the airline’s debt of over Rs 58,000 crore.

The private placement got a good response from institutional investors with AIAHL receiving bids of Rs 20,830 crore.

A statement from the BSE said AIAHL successfully raised Rs 7,000 crore by issuing bonds on a private placement basis using the ‘BSE bond’ platform.

It added that the bids of Rs 20,830 crore were the highest ever received for an yield-based bidding.

“It is very heartening to note that the entire issue was subscribed at a very attractive rate of 6.99 per cent. This reflects the confidence of the entire market in securities fully backed by the government. The positive response from all categories of investors will act as a stimulus to the divestment process of Air India,’’ Ashwani Lohani, chairman of AIAHL and CMD of Air India, said while commenting on the strong response to the bond issue.

PTI quoting an Air India official said that the State Bank of India (SBI) and group entities had put in bids worth nearly Rs 3,000 crore.

The bids of ICICI Securities and Axis Bank were more than Rs 1,000 crore each. As many as 119 bids were received for the offer. It is estimated that at 6.99 per cent, there will be a benefit of 150 basis points to 200 basis points in terms of fund raising costs for AIAHL.

Vinod Hejmadi, AIAHL director and Air India’s director (finance), said the issue was subscribed 20.83 times despite the volatile market conditions on Monday.

“It was the record largest mobilisation of funds for yield-based bidding in the history of BSE’s electronic bidding platform’’ he said. BSE’s debt platform commenced operations in July 2016. Since then 189 issuers have done 1,801 bond issues and have raised Rs 8,84,567 crore.