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GMR Airports' ₹1,500-Crore Bond Tranche Sees Tepid Demand, Arranger Steps In
15 Aug
Summary
- GMR Airports' ₹1,500-crore bond tranche secured only ₹950 crore in bids
- Offered 10.35% yield for 18 months, but faced limited interest from mutual funds
- Morgan Stanley, the arranger, had to step in to cover the shortfall
On August 15th, 2025, GMR Airports' planned ₹1,500-crore mutual fund tranche of an 18-month bond received a mixed response, forcing the arranger Morgan Stanley to step in and take the shortfall. The tranche, offering a 10.35% yield, drew bids of only about ₹950 crore from investors, including HDFC Mutual Fund, Aditya Birla MF, Citibank, Axis MF, and Nippon India MF.
In contrast, GMR's ₹4,400 crore bank tranche, which carried a three-year maturity at 10.50%, saw strong demand. Deutsche Bank, SBI Mutual Fund, Barclays, Tata Capital, Aditya Birla, Alpha Alternatives, and Trust Capital all participated in the bank tranche.
The lukewarm response to the mutual fund tranche highlights the shrinking pool of buyers for lower-rated credit paper, as the segment has increasingly migrated to alternative investment funds (AIFs) and private credit funds, leaving mutual funds less active in such investments. Morgan Stanley, which had assured the issuer of securing mutual fund demand, eventually absorbed the remaining portion to ensure the overall deal went through.
The fundraise is expected to reduce GMR Airports' average borrowing cost by nearly 3 percentage points. Crisil has assigned an A+ rating to the newly-issued non-convertible debentures (NCDs). GMR Airports owns and operates major airports in India, including Delhi and Hyderabad.
