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Air India SPV raises Rs 7,000 crores through bond issue

PSU Watch Bureau

New Delhi: Air India SPV, Air India Assets Holdings Ltd (AIAHL), said on Monday that it has raised Rs 7,000 crores through bonds issue, which was oversubscribed. The amount will go into cleaning the debt on AIAHL's debt.

Bonds issues draws a 'record' response

"The company received bids worth Rs 20,830 crore, which is the highest in the yield based bond market in the history of BSE. The company has decided to accept the entire issue of Rs 7,000 crore," an AIAHL spokesperson said.

The spokesperson added that the Air India SPV bond issue with a three-year tenure of Rs 1,000 crores with a green shoe option of Rs 6,000 crores was fully subscribed at 6.99 percent.

The backdrop

AIAHL is a special purpose vehicle (SPV) of state-run Air India. As part of its efforts to clean up the balance sheet of the national carrier, which has a debt burden of more than Rs 58,000 crores, a little more than half the total debt on Air India's books is to be repaid through the proceeds of issuance of bonds by AIAHL.

The history of the SPV

The government incorporated the SPV in January 2018 after it approved the transfer of Air India's accumulated working capital loan over to AIAHL on February 28, without the backing of any asset. This was done to attract buyers for the airline. The national carrier's non-core assets like artefacts and paintings were also kept with the AIAHL which the PSU is expected to monetise.
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