Air India’s Arm Raises Rs. 7,000 Crore from Bond Market

A special purpose vehicle of the national carrier Air India has raised 7,000 crore from the bond market, in a major exercise to clean up the balance sheet before privatisation. The bond was floated by Air India Asset Holdings, which houses around 26,500 crore of Air India’s 60,000 crore debt and non-core assets like real estate. Among the top three subscribers were Trust Capital, ICICI Bank and SBI. While Trust Capital and ICICI subscribed to 2,000 crore each, SBI subscribed to 1,100 crore. The bond was floated at 6.99 per cent, around 86 basis points higher than the three-year government bond yield, which stood at 6.13 per cent and was subscribed nearly three times.

As per spokesperson from Air India “The bond received bids worth 20,830 crore from 47 bidders which includes banks and mutual funds. It is the highest in the yieldbased bond market in the history of Bombay Stock Exchange. The company has decided to accept the entire issue of 7,000 crore.” A senior Air India official said the bond issue was timed well because higher oil prices resulted in increase in bond yields in the Indian market. “Also it’s a Government of India-subscribed bond essentially meaning that the government is responsible for the coupon payment. This increased the confidence of the market,” the official said.