Delhi International Airport Ratings Downgraded to B1 by Moody’s | Latest India News
Moody’s Investors Service downgraded Delhi International Airport’s corporate family rating (DIAL) and senior secured ratings to B1 from Ba3.
It also lowered the benchmark credit rating of DIAL to b1 from ba3. At the same time, Moody’s downgraded Cliffton Ltd’s senior covered bond rating to B1 from Ba3.
The outlook for ratings is negative.
The downgrade reflects the negative impact of the reduction in passenger traffic and airport revenues during the current financial year ending in March 2022 due to the increase in the number of daily infections since the end of March.
“We believe that the resulting reduction in revenues will result in additional debt to complete the airport expansion and extend the resumption of DIAL’s financial measures to a level consistent with a Ba rating,” said Spencer Ng, vice-president. Chairman and Senior Analyst of Moody’s.
DIAL is the concessionaire of Indira Gandhi International Airport which is located in the political capital of India and operates under an operation, management and development agreement with the Airport Authority of India.
Cliffton Ltd is a special orphan vehicle created to facilitate the issuance of USD bonds. The proceeds of the transaction were used to subscribe to INR non-convertible debentures issued by DIAL which has no ownership or management control in Cliffton Ltd.
Moody’s said the negative outlook captures downside risks over the next 12-18 months, given significant uncertainty in the resumption of passenger traffic in India, which will be heavily influenced by the lifting of travel restrictions and the successful deployment of vaccines as indicated by the government.
Passenger traffic at the airport was likely to have fallen more than 60 percent in May from February’s level. Since a large majority of DIAL’s revenue is related to airport traffic, Moody’s expects revenue to decline as passenger numbers decline.
While revenue declines due to a pandemic are not uncommon among rated airports, DIAL has limited ability to compensate for the reduction in cash flow by reducing dividends or significantly deferring its capital expenditures as part of the changes. plans currently announced.
As such, Moody’s expects the airport to need additional debt – compared to previous forecasts – instead of the operating cash flow lost due to the second wave of coronavirus to complete its operation. ₹Extension of 9,800 crores.