GMR arm DIAL raises $522m in 10yr bonds

Mumbai: GMR Infrastructure’s airport arm Delhi International Airport (DIAL) has raised $522 million through the issue of high-yield 10-year bonds in the international market. DIAL is a joint venture between GMR Airports and Germany’s Fraport. High-yield bonds refer to instruments that offer a higher return to compensate for the risk. DIAL’s bonds, which are rated BB, offer a return of 6.13%.
The long-term bonds will be used to repay DIAL’s domestic debt and some of its foreign borrowing.
“There is a huge positivity around Indian paper in the international market — a sentiment similar to the one prevailing immediately after the 2014 election. However, this time around it is not just a euphoric view but a long-term sustainable belief,” said Amit Bordia, head (corporate finance), Deutsche Bank India. The German bank was a joint book runner for the issue along with seven other banks.
While foreign institutional investor interest in domestic currency corporate bonds has been muted, there is a much wider investor base for foreign currency bonds. “There are two other factors that are exogenous to India. There is tremendous liquidity and low yields in the international market, which is providing significant opportunity for Indian corporates to tap them,” said Bordia.
The quest for yield among international bonds has resulted in a surge in high-yield bond issuance from India. FY17 has seen over $2.5 billion worth of high-yield issuances from India as compared to $800 million last year.
Earlier issues include a $300 million, five-year bond with a three-year call option by Jubilant Pharma last month. The pharma company raised funds at a cost of 4.87%. In August, Greenko Investment and Samvardhana Motherson Automotive investments raised $500 million and $100 million respectively at 4.88%. In July, Glenmark Pharma and HT Global IT systems raised $200 million and $300 million respectively by issuing five-year bonds. The earliest issuer in FY17 was Reliance Communication with a $300-million issue.