Air India Assets Holding (AIAHL), a special purpose vehicle formed by the government of India to acquire the non-core assets of Air India (AIL) and its subsidiaries among other things, is set to hit the non-convertible debentures (NCD) market on Thursday to raise upto Rs. 7,000 crore through 10-year paper, bond dealers said.
The proceeds of the NCDs will be used by AIAHL to refinance the loans availed by AIL. The issue will be open for bids on Thursday.
AIAHL was set up with the objective of acquiring the non-core assets of AIL, its subsidiaries, certain immovable properties and working capital loans and rights acquired amongst other objects.
The bonds proposed to be issued have been assigned a rating of "[ICRA] AAA(CE) (Stable)" by the ratings agency ICRA.
This will be the second bond issue by AIAHL in a month's time. In mid-September, AIAHL had raised Rs. 7,000 crore through three-year paper at 6.99%. Back then, the company had received bids worth Rs. 20,830 crore which is the highest in the yield-based bond market in the history of Bombay Stock Exchange, according to a statement.
Bond dealers are saying that the forthcoming NCD issue will definitely attract interest from market participants but what needs to be seen is how strong the interest would be, considering that the firm is tapping the market for the second time in a few weeks.
"It is difficult to predict where the yields could be. What we are watching out for is how much interest would this paper fetch. The company had recently raised Rs. 7,000 crore from the market. This time, the firm is looking to issue a long tenor paper," said a bond dealer who did not wished to be named.
The timing of the issue is interesting because despite a 25 basis points repo rate cut by the Reserve Bank of India (RBI), bond yields have refused to transmit the same. The 10-year benchmark yield closed at 6.675% on Monday.
According to experts, the bond market is now watching out for potential open market operations (OMO) purchases by the RBI towards the end of the year when the liquidity starts going into the deficit mode.
Indian firms and banks have been active in the NCD market this fiscal. Between April and August 2019, they raised Rs. 2.49 lakh crore through private placement, according to data by the Securities and Exchange Board of India.