India's flag carrier, Air India averted a default and secured short-term funds to service Rs 700 crore worth non-convertible debentures (NCDs) due for redemption on Thursday, source told news agency PTI.
The debt-laden national carrier's operations and revenue flow have been hit by coronavirus outbreak, which has also resulted in suspension of domestic and international flights.
On March 23, India Ratings warned that Air India may default on the debt payment, given the poor cash flow position after the announcement of the country-wide lockdown along with the national airspace, till April 14th. Accordingly, the agency had on the same evening placed the instrument on rating watch with negative outlook.
On Thursday, an airline source told PTI that it has secured the needed amount from banks with government guarantee to pay interest to investors. However, how much money has been raised or the amount needed to pay, has not been disclosed.
A reply to a mail sent to an Air India spokesperson for confirmation is awaited.
According to the source, Air India has secured short-term bank loans backed by government guarantee to refinance the entire principal amount of Rs 700 crore of NCDs. These debentures are due for interest payment or redemption on March 26.
The airline needs Rs 30 crore to pay the interest.
The issuer's account was not provided for the same as of March 25, according to IndiRa report. The amount was on rating watch negative since March 23, which reflects delays in funding the designated account as on March 23, as confirmed by the trustee IDBI Trusteeship Services.