Air India’s Rs 7,400-cr debt issue to get govt guarantee

Our Bureau New Delhi | Updated on November 17, 2017 Published on October 09, 2012

air india1.jpg

The Rs 7,400-crore non-convertible debentures of Air India will get the sovereign guarantee of the Government.

The decision to provide the “unconditional sovereign guarantee” was cleared at a meeting here late this afternoon. The NCD will have a tenure of 19 years and the interest payable will not exceed 9.2 per cent —- 70 basis points above the 10 year benchmark Government of India security.

Part of rejig plan

Thus if the current 10-year benchmark yield is 8.15 per cent, the maximum applicable interest payment will be 8.85 per cent. The NCD proceeds will be used to repay lenders.

NCDS are part of the airline’s financial restructuring plan that was cleared by the Government in March.

“Air India hopes to close the NCD within two to three weeks of getting all clearances. The airline plans to appoint merchant bankers soon to market the NCD.

It is likely to be subscribed by pension funds, EPFO, and financial institutions,” a senior airline official said.

Earlier, the Finance Ministry raised questions on providing the guarantee unless some specific goals were set for the airline as part of the turnaround plan. But after several meetings between the Minister for Civil Aviation Ajit Singh and Finance Minister P. Chidambaram the proposal received Government approval.

>[email protected]

Published on October 09, 2012
This article is closed for comments.
Please Email the Editor