Bangalore International Airport Limited (BIAL) is tapping capital markets to raise up to Rs 5,000 crore through non-convertible debentures (NCDs) for refinancing and preparation for capital expenditure (capex) for expansion.
The airport operator, BIAL, is currently in the process of refinancing the term loans (taken for the Phase 2 project) with longer-tenure NCDs of 15 years, including a moratorium of seven years, to conserve cash to fund the expansion projects over FY25–29. ICRA has assigned a rating of “AAA” (Stable) for the proposed NCDs.
BIAL, where Prem Watsa-promoted Fairfax Group holds a 64 per cent stake, did not respond to queries from Business Standard.
BIAL is planning to undertake capex with an outlay of around Rs 16,000 crore over FY25–FY29 for capacity expansion. The company is expected to avail debt of around Rs 13,000 crore for undertaking this capex. The expansion capex is likely to include Terminal 2 expansion, Terminal 1 upgrade, and construction of a west cross-field taxiway, eastern connectivity tunnel, metro stations, and sustaining capex.
The expansion is expected to increase the passenger handling capacity of BIAL to 80–85 million passengers per annum (mppa). It has completed the Phase 2 capex, increasing its capacity to 51.5 mppa from 26.5 mppa.
Rating agency ICRA said the ratings for the NCDs factor in the joint ownership of BIAL by the Airports Authority of India (AAI) and the Government of Karnataka (GoK), and the presence of nominees from both entities on the company’s board lends comfort. While the large debt-funded capex is likely to moderate the leverage metrics, the debt coverage metrics are expected to remain healthy.
The strong parentage of BIAL, coupled with the long concession period, provides it with strong financial flexibility. The modest revenue-sharing terms with the Government of India (GoI) is another comforting factor. The cash flow ring-fencing and the restrictive debt covenants for making any dividend payments support BIAL’s credit profile, according to ICRA.
The liquidity position of the company is adequate, with an unencumbered cash balance of Rs 2,347 crore and a Debt Service Reserve Account (DSRA) of Rs 238 crore as on August 31, 2024.
Additionally, the company has a cushion of Rs 50 crore of working capital limits as on August 31, 2024. Further, the cash flow from operations would be sufficient to service the repayment obligations of around Rs 513 crore in FY25 and Rs 462 crore in FY26.
First Published: Sep 26 2024 | 6:33 PM IST
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