India Ratings has assigned Air India Ltd’s Rs 7,400-crore non-convertible debenture (NCD) issue a final rating of ‘IND AAA (SO)’. The final rating is based on the receipt of the debenture trust deed, deed of guarantee and trusteeship agreement, conforming to information already received.
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. It is a continuing guarantee and shall remain in force and effect until the complete discharge of the NCD obligations.
The guarantee will also remain in force if Air India 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 bi-annually.
The NCDs in all three tranches carry a coupon of 9.08 per cent per annum. In Series I, II and III, AIL has the option to retain additional subscription such that the total amount mobilised across all three tranches does not exceed Rs 74,000 crore.
The NCD issue is a part of the government’s restructuring plan for reviving the airline. The proceeds of this NCD issue will be used to repay outstanding short-term bank loans.