DIAL raises $289 mn in junk bond sale at 6.12 pc coupon

Delhi International Airport (DIAL), which operates the nation's largest Indira Gandhi International Airport in the national capital, has raised USD 288.75 million by selling high yielding secured bonds to international investors.
According to Citi India, which was one of the joint lead managers to the issue, told PTI today that the just-completed bond sale is the first such instrument not only out of the country, but across Asia this year.
The DIAL issue is also the first such instrument from the public-private partnership space in the country.
The 7-year Reg S secured bonds, which has a "stable" rating from major international rating agencies, were priced at 6.125 per cent, against initial guidance of 6.5 per cent.

While Moody's has rated the issue at Ba1 with stable outlook, S&P has given a BB rating with stable outlook.
It can be recalled that 2014 was the record year not only for high quality bond offerings from the country, but even for the junk bond market with total debt raising touching USD 19 billion from the country.
Out of this, over USD 5.5 billions were raised by companies like like Tata Steel, Tata Motors Rolta and Motherson Sumi among others, selling junk bonds which were colloquially used for a high-yielding or non-investment grade bonds, to international investors. Many of these companies are paying up to 8.8 per cent to such instruments.

Junk bonds are generally fixed-income instruments that carry a lower rating and are called so because of their higher default risk in comparison to the investment-grade securities.