Covid Woes: Moody’s downgrades GMR’s Delhi airport

Given a big majority of DIAL’s income is linked to airport visitors, Moody’s expects income to fall consistent with the drop in passenger numbers.

Moody’s Traders Service on Friday downgraded Delhi Worldwide Airport Restricted’s (DIAL) company household score (CFR) and senior secured scores to ‘B1’ from ‘Ba3’. The score company additionally downgraded DIAL’s baseline credit score evaluation (BCA) and Cliffton Restricted’s senior secured bond score to ‘B1’ from ‘Ba3’, and mentioned the outlook on the scores is damaging.

Moody’s mentioned the damaging outlook captures draw back dangers over the following 12-18 months, given the fabric uncertainty within the restoration of India’s passenger visitors, which will likely be closely influenced by when journey restrictions are lifted and the profitable roll-out of vaccines as outlined by the federal government.

Passenger visitors on the airport had possible fallen by greater than 60% in Could from the February 2021 degree based mostly on reported every day visitors figures. Given a big majority of DIAL’s income is linked to airport visitors, Moody’s expects income to fall consistent with the drop in passenger numbers.

Spencer Ng, a Moody’s vice-president and senior analyst, mentioned, “The score downgrade displays the hostile influence of diminished passenger visitors and airport income within the present fiscal yr ending March 2022, because of the surge in every day an infection numbers since late March. We consider the ensuing discount in income will result in further debt being required to finish the airport’s growth and delay the restoration in DIAL’s monetary metrics to a degree in keeping with a Ba score.”

DIAL is the concessionaire for the Indira Gandhi Worldwide Airport, in Delhi, and operates beneath an operations, administration and growth settlement with the Airports Authority of India.

Cliffton Restricted is an orphan special-purpose car established to facilitate a greenback bond issuance. Proceeds from the transaction had been used to subscribed to rupee non-convertible debentures issued by DIAL. DIAL doesn’t have any fairness curiosity or administration management in Cliffton Restricted.

Moody’s noticed that DIAL has restricted capability to offset diminished money circulation by reducing dividends or deferring its capital expenditure in a significant means, beneath at the moment introduced plans. The score agency expects the airport to want further debt — relative to earlier forecasts — in lieu of the working money circulation misplaced because of the second coronavirus wave, to finish its Rs 98-billion growth.

Moody’s expects DIAL’s funds from operations (FFO) to stay damaging for the following 12 months after factoring in capitalised curiosity. FFO would possible stay damaging till after the completion of the airport growth and implementation of upper tariffs after the following regulatory dedication.

The scores agency additionally mentioned that though income ought to progressively recuperate consistent with passenger visitors, the projected development beneath its base-case situation is unlikely to be ample to cowl rising curiosity bills (together with capitalised curiosity) because the airport attracts down from its lease association or different debt to fund the growth over the following 2-3 years. That is significantly so after contemplating DIAL’s obligation to share 45.99% of its income with AAI beneath its concession settlement.

Nonetheless, factoring the proceeds from its $450 million bond issuance in March, DIAL has a strong liquidity profile that’s prone to cowl its working and financing prices, in addition to deliberate capital spending for the following 12 months. As of the top of March, the airport had complete liquidity, together with each money and short-term funding of near Rs 5,000 crore. “A number of the quantity will repay its $288.75 million bond expiring in February 2022, together with round $105 million of prepayment made in April 2021,” it mentioned.