GMR Hyderabad International Airport, a step-down subsidiary of GMR Airports, raised US$300 million through a high-yield senior secured bond with a five-year tenor. The proceeds of the offering will be used to fund the expansion of the Rajiv Gandhi International Airport in Hyderabad.
The bonds, rated Ba1 (negative) by Moody’s, was the first foreign high-yield offering by an Indian company under the revamped external commercial borrowings (ECB) framework. This is GMR’s second high-yield bond issuance, the first one, priced in 2016, was used to refinance rupee debt.
“GMR chose a foreign bond issue as their previous bond issue was received well by the international investors and the bonds had priced at a good level even though it was high yield. Given the stress in the Indian banking system and liquidity issues in the Indian market, the foreign bond market was possibly more appealing. Dollar bonds also diversifies the sources and currency of their funding,” said Manisha Shroff, a partner at Khaitan & Co, the Indian legal advisers to GMR.
“With the introduction of the new ECB framework, the end uses had to be analysed in light of the revisions in the rules and the removal of the track-based approach,” Gautham Srinivas, a partner at Khaitan, told Asia Business Law Journal. “The end-use prescriptions, which were there in the extant guidelines, have been completely replaced by a negative list of uses.”
The complications of tariff determination by Airports Economic Regulatory Authority of India, ongoing litigation in this regard and its effects on the revenues of the issuer were some of the key challenges in the bond offering, Shroff said.
The firm was represented by partners Shroff and Srinivas, principal associate Rolwine Alva, senior associate Oindrila Bhowmik and associates Nandini Paliwal, Meenakshi Kurpad and Enakshi Jha. Partner Ritu Shaktawat and senior associate Sneh Shah advised on the taxation aspects.
The firm carried out due diligence, advised on taxation aspects, reviewed and drafted the offering memorandum from an Indian law perspective and drafted the security document.