GMR Airports’ Rs 1,500 cr MF bond tranche sees interests from Morgan Stanley, others

MUMBAI: GMR Airport’s planned Rs 1,500 crore mutual fund tranche of an 18-month bond saw mixed response and was subscribed by investors including arranger Morgan Stanley and mutual funds, according to people familiar with the matter.

The tranche, offering yields of 10.35% for 18 months, drew bids of only about Rs 950 crore from investors including HDFC Mutual Fund, Axis MF, Nippon India MF.

In this tranche HDFC Mutual Fund picked up Rs 400 crore, Aditya Birla MF Rs 200 crore, Citibank Rs 200 crore, and Rs 75 crore each from Axis MF and Nippon India MF, the people said. The issue was raised earlier this week on Monday.


In contrast demand for GMR’s Rs 4,400 crore bank tranche, which carried a three-year maturity at 10.50%, saw demand from banks, NBFCs and institutional investors. Deutsche Bank bought Rs 1,500 crore, SBI Mutual Fund took Rs 1,050 crore, Barclays invested Rs 750 crore, Tata Capital Rs 450 crore, Aditya Birla Rs 300 crore, Alpha Alternatives Rs 250 crore, and Trust Capital Rs 100 crore, they said.

Morgan Stanley, which was the arranger for the Rs 1,500 crore tranche, took a large portion of the deal.


“The Rs 1,500 crore tranche of the recent issue saw tepid demand as the pool of buyers for lower-rated credit paper continues to shrink,” said an investor in the deal.

A GMR spokesperson said that demand (for Rs 1,500 crore tranche) exceeded supply, with over 95% of bids at a premium, leading to pricing above the base issue price and due to strong demand, three mutual funds received partial or no allocation and may have to source bonds in the secondary market.

SBI Mutual Fund, which was eligible in the mutual fund leg, opted to increase its exposure to the 3-year tranche instead, while a few others dropped out at the last minute. The restricted investor base meant the addressable market was already limited, and within that, interest was subdued. The segment has increasingly migrated to AIFs and private credit funds, leaving MFs less active in such paper. Morgan Stanley arranged the MF tranche, while JP Morgan, Barclays and Deutsche Bank handled the bank tranche.

The fund raise is expected to reduce the company's average borrowing costs by nearly 300 basis points.
Crisil has assigned an A+ rating to the newly issued NCD.

GMR Airports owns and operates major Indian airports, including those in Delhi and Hyderabad.