AIAHL to raise Rs 22K cr through bonds; first tranche next week

New Delhi: Air India Assets Holdings Ltd (AIAHL) will issue bonds worth Rs 22,000 crore in the coming weeks, with the first tranche worth Rs 7,000 crore set to hit the market on September 16, according to a senior official.

AIAHL — a special purpose vehicle of national carrier Air India — is planning to raise the amount by issuing bonds with different tenures.

As part of efforts to clean up the balance sheet of Air India, which has a debt burden of more than Rs 58,000 crore, little over half of the amount is to be repaid by way of proceeds from the issuance of bonds by AIAHL.

The senior official said that AIAHL would issue bonds worth Rs 7,000 crore on September 16. These bonds would have a tenure of three years and three months. Banks and mutual funds are expected to participate in the first tranche of the bond offering, the official added. AIAHL would issue 10-year bonds worth Rs 15,000 crore in the coming weeks.

The proceeds from the bond offering would be used to repay Air India's debt, the official said.

As the debt-laden national carrier is set for disinvestment, NCDs worth little over Rs 7,400 crore in the name of Air India would be novated to AIAHL.

While it would be the first time that AIAHL would be issuing bonds, Air India has issued bonds on earlier occasions and the last such issue was worth around Rs 7,400 crore done in 2012.

When AIAHL was set up last year, the plan was to transfer Rs 29,464 crore of Air India's debt to the special purpose vehicle.

Now, AIAHL would raise the money and that would be used to repay the airline's debt, the official said.

In February, the Cabinet gave its ex-post facto approval for the creation of the AIAHL and associated activities for the disinvestment of Air India and its subsidiaries/ joint ventures.

AIAHL has been created for warehousing accumulated working capital loan not backed by any asset along with four subsidiaries, non-core assets, painting and artefacts and other non-operational assets of the airline, an official said in February.

The four subsidiaries are Air India Air Transport Services Ltd (AIATSL), Airline Allied Services Ltd (AASL), Air India Engineering Services Ltd (AIESL) and Hotel Corporation of India Ltd (HCI).