Fitch rates GMR Hyderabad bond BB+

Fitch Ratings said it assigned an expected rating of BB+ to GMR Hyderabad International Airport Ltd.'s proposed bond of up to $350 million.

The outlook is negative.

The company is a growing, mid-sized regional origin and destination (O&D) airport with a relatively short track record, which operates significantly above designed capacity under a blended till pricing regime, Fitch said.

Volumes recovered rapidly from the collapse in 2013 of its main airline, demonstrating the airport's strong traffic resilience, but the airport lacks a track record in terms of consistent and transparent price regulation, the agency said.

The negative outlook reflects the company's forecasted net debt-to-EBITDA, which is averaging about 5.1x, Fitch said.

The agency said it believes that higher capital expenditure is driving this increased leverage forecast, but that it is justified by the strong traffic growth and will be more efficient than the previous more conservative phased capex plan.

Nonetheless, the consequent increase in net debt-to-EBITDA through 2021 drives the negative outlook, Fitch said.

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