S&P rates Delhi International bonds BB

S&P said it assigned a BB long-term issue rating to proposed rupee-denominated offshore bonds commonly known as "masala" bonds and the dollar-denominated bonds issued by Delhi International Airport Pte. Ltd.

The proceeds will be used to refinance existing rupee loans and external commercial borrowings, S&P said.

The proposed refinancing will help lengthen the company’s debt-maturity profile and remove existing maintenance covenants, the agency explained.

S&P also said it expects the company's planned hedging and earnings in foreign currency to mitigate currency risk.

Delhi International intends to refinance in part or in full its existing amortizing debt with bullet bonds with a maturity of more than five years, the agency said.

The company also intends to hedge the entire principal on the foreign-currency borrowings and 25% of the interest payment, S&P said.

The company’s financial position is expected to materially weaken in the fiscal year ending March 2018 from the current strong levels, the agency added, before recovering.

The extent of the weakening and the recovery will significantly depend on tariff cuts by regulators, the company’s capital expenditure for the next phase of growth and its payment structure for commercial property development, S&P said.

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