Shapoorji Pallonji highway project plans to raise Rs. 2,700 crore.

The Shapoorji Pallonji-owned SP Jammu Udhampur Highway, or SPJUHI, is planning to raise close to Rs. 2,700 crore by selling annuity-based corporate bonds, not seen in markets in the past few years, as it plans to repay its existing debt, including external commercial borrowing and rupee-loans. An email sent to the company did not elicit any response.

Kotak Mahindra Bank and HSBC are the two arrangers, which are already connecting with institutional investors.The issuance is likely to hit the market by the first week of May.

The company wishes to offer a rate of less than 9% but some institutional investors are expecting 9.25-9.35%, which is about 125-135 basis points higher than the benchmark bond yield. Maturities would be in the range of five to 15 years.

'Completion risk is over as the project is already done,' said Kalpesh Gada, head of structured finance, Icra, the rating company. 'But if maintenance is not done adequately, annuity receipts can be affected.'

Bond holders will be repaid from annuity-based income, which the issuing company is supposed to receive from the National Highway Authority of India (NHAI). SP-JUHI will receive Rs. 201.9 crore every six months till 2031. Investors' fund will not be deployed fresh, but used for refinancing.

ET