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Delhi Airport’s ‘meaningful’, unusual & low-tax $290m high-yield bond issue: 5 law firms advise

AZB & Partners, Norton Rose Fulbright and Milbank, Tweed, Hadley & McCloy advised the joint lead managers the notes trustee on Delhi International Airport’s (DIAL) $288.75m issue of notes, on which DIAL was advised by Link Legal India Law Services and Davis Polk & Wardwell.

AZB partner Yashwant Mathur with senior associates Namrata Vishwanath, Esha Pruthi, Ambarish Mohanty, and Ravi Bhasin and associates Abhyudai Singh and Shridha Malhotra acted for the joint lead managers Standard Chartered Bank, Citigroup Global Markets, The Hong Kong and Shanghai Banking Corporation and JP Morgan Securities, and the notes trustee Citicorp International.

Milbank Singapore partner Naomi J Ishikawa acted for the underwriters on New York law.

Norton Rose Hong Kong associate attorney at law Grace Lo acted for the notes trustee on New York law.

Link Legal Delhi partner Ajay Sawhney and Davis Polk Hong Kong counsel Ferish Patel acted for DIAL, which issued 6.125 per cent senior secured notes due 2022 under Regulation S of the US Securities Act 1933. The notes have been listed with the Singapore Exchange Securities Trading.

High yield bond

One of the lawyers on the deal told Legally India that this is the first ever Indian high-yield bond by an infrastructure sector issuer, and interest payments on it would enjoy the benefit of a reduced tax rate of 5 per cent, instead of the usual 40 per cent, under the Income Tax Act 1961.

“This is the first high-yield (HY) bond out of India, and one of the first in Asia, this year. This is quite meaningful, as there has been a meaningful overhang in Asian HY due to the issues in the [China] HY market, as well as the impact of Circular 41 on the Indian high-yield market,” commented the lawyer.

DIAL is a subsidiary of GMR Infrastructure, manages Delhi’s Indira Gandhi International Airport, and will use the money raised through this issue to refinance one of its current outstanding external commercial borrowings, reported VC Circle.

The lawyer said that this is possibly the first ever international high-yield bond issued by an airport operator in Asia, encouraging the kind of growth in infrastructure investments that are required to meet the astronomical growth rates in Asian air travel.

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