The Airport Rating Agency, Moody’s, has downgraded Delhi International Airport’s Corporate Family Rating, Senior Secured Rating and Baseline Credit Assessment Rating from ‘Ba3’ to ‘B1’. The trio of downgrades can be attributed to significant decreases in Airport Passenger Traffic, thereby resulting in dwindling revenues. Moody’s has assigned its ratings on what it believes will be the primary risks to the Airport’s financial health over the next 18 months. Indeed, India is currently experiencing the peak of the COVID-19 pandemic, resulting in a 60% decrease in passenger traffic at Delhi International Airport last month, compared to February 2021.
Moody’s Vice President, Spencer Ng, said, “The rating downgrade reflects the adverse impact of reduced passenger traffic and airport revenue in the current fiscal year ending March 2022, due to the surge in daily infection numbers since late March. We believe the consequent reduction in revenue will lead to additional debt being required to complete the airport’s expansion and prolong the recovery in Delhi International Airport Limited’s financial metrics to a level consistent with a Ba rating.”
Loan Interest To Adversely Affect Recovery
Moody’s believe that Delhi International Airport Limited’s funds from operations will be affected by incurring interest expenses. This is due to the Airport’s plans for expansion being funded by drawing down debt. Of critical significance, the Airport is contractually bound to share 45.99% of its revenue with the Airport’s Authority of India under the current Concession Agreement.
Clifton Limited have issued a $450 million bond to Delhi International Airport Limited, which should help keep the Airport liquid enough to run its operations over the next 12 months. However, the Airport will hope that Passenger Traffic can surge in the near future to expedite repayment capabilities of such bonds.
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