Fitch Ratings has assigned Mumbai International Airport Limited's (MIAL) proposed US dollar bonds an expected rating of 'BB+(EXP)'. The Outlook is Stable.
The bond proceeds will be used to repay the bridge loan facility at MIAL, and for capex. The final rating on the proposed bonds is contingent upon the receipt of final documents conforming to information already received, it said in a press statement.
The rating reflects Mumbai's strong passenger growth potential in the medium-to-long term, MIAL's regulated asset base, higher contribution of domestic traffic than international traffic and adequate financial profile.
The rating case assumes a full recovery of traffic to pre- pandemic levels by end-2024, with leverage, on average, of 7.6x over FY23-FY27 (financial year end March). The Stable Outlook reflects MIAL's large headroom against our negative rating action trigger of 10.0x.
Mumbai is the industrial and financial hub of India. Within the regulatory framework, the concessionaire earns return on its regulatory asset base (RAB), the aeronautical tariffs are determined under a hybrid till with 30 percent of non-aeronautical revenue for cross-subsidisation and the concession fee is based on a revenue share of 38.7 percent to Airports Authority of India (AAI). The fairly stable domestic traffic contributes 73 percent to MIAL's total passenger base.
MIAL's capex is mainly maintenance capex with some portion of the capex aimed at improving runway efficiency.
The expected rating also considers likely capacity constraints at the airport in the medium term and the operation of Navi Mumbai International Airport Limited (NMIAL) from FY25 to cater for additional traffic growth in Mumbai. The passenger base in the FY20 was 46 million and has grown at CAGR of 9% over the past five years.
MIAL is a SPV, incorporated in March 2006 to design, develop, construct, upgrade, operate, maintain and manage Chhatrapati Shivaji Maharaj International Airport (CSMIA) in Mumbai, has a 30-year concession from May 2006 with a provision for a 30-year extension.
