India Ratings has assigned Air India Ltd’s (AIL) Rs 7,400 crore non-convertible debenture (NCD) issue a final rating of ‘IND AAA (SO)’. Instruments with this rating are considered to have the highest degree of safety regarding timely servicing of financial obligations. Such instruments carry lowest credit risk. The rating reflects the absolute, unconditional and irrevocable guarantee extended by the Government of India for the timely repayment of principal and interest on AIL’s NCDs.
The guarantee will also remain in force if AIL cannot meet its NCD obligations due to any dissolution or winding up or similar proceedings initiated by or against the company.
The NCDs are to be issued in three tranches — Series I of Rs 3,000 crore, Series II of Rs 100 crore, and Series III of Rs 5 crore. All NCDs have a tenor of 19 years, with principal redemption in five equal instalments starting from the 15th year and interest payments being made biannually. The NCDs in all three tranches carry a coupon of 9.08 per cent a year. The NCD issue is a part of the government’s restructuring plan for reviving the airline.