National carrier Air India's proposed jumbo Rs 74 bn ($ 1.3 bn) 19-year bond sale has failed to take off again, after it postponed the deadline for bid submissions to October 12. The company is still hoping to get an unconditional guarantee before the new deadline.
A guarantee from the government did come on September 18 but it had conditions stipulating the company had to meet certain milestones for its performance every five years.
But such a conditional guarantee is not only unacceptable to Air India, but also to bond investors, resulting in the issuance delay.
With the guarantee issue still pending, bankers will wait till this Friday, when Air India hopes to announce the dates for bid submissions.
This is the sixth such postponement. Originally, bids were to be submitted on or before August 6, but this deadline was moved to August 31, then to September 20 and once more to September 26, with the last delay to October 5.
Air India, which has not posted a net profit in the last five years, has maintained that it would not be able to meet any performance milestones in an already competitive industry.
Under Rs 224.68 bn restructuring plan approved for Air India in April, the company was supposed to complete the jumbo bond sale by September 30 to refinance its short-term loans.
We are told that the unconditional guarantee is on its way. The moment we receive the document in hand, dates for the bond sale will be announced, said a source.Air India bonds are rated located rated AAA. The coupon on the bonds is capped at 9.50%.
Repayment of the bonds will happen in five equal instalments starting from 15th year from the date of allotment.
SBI Caps is the joint arranger for the sale, which will be one of the biggest bond sales in recent times.