Jet Airways is looking to raise $100 million to refinance rupee-based loans

Jet Airways is now looking forward to raise $100 million, or almost Rs 680 crore, in US dollar-denominated debt by March 2017 so as to refinance rupee-based loans. The idea surfaced so that the airlines can almost halve its borrowing rate.

"The airline will keep refinancing more expensive rupee debt whenever possible. The move will help cut Jet's borrowing rate to 6-7%,” a person familiar with the procedure, told ET.

He did not divulge if the country's second-biggest airline by market share has initiated talks with any bank for dollar debt.

The Airlines have been looking forward to raising overseas loans, but all of its recent overseas debt deals have been done with the support of Abu Dhabi-based Etihad Airways, which holds 24% stake in Jet Airways.

Earlier this year, it received nearly Rs 700 crore from a special purpose vehicle created by Etihad in the form of non-convertible debentures, and the funds were used to refinance debt.

Prior to that, Jet airways raised $150 million from a consortium of Gulf banks including Abu Dhabi Commercial Bank PJSC, Commercial Bank International PJSC, Ahli United Bank BSC and Arab Banking Corporation BSC. It also raised $150 million from HSBC. Both the loans were raised with Etihad's backing.

While the debt of the airlines has only increased with time, overseas loans have helped it cut consolidated finance costs to Rs 885 crore as of March 2016, when 85% of its total debt was in dollar denomination, from Rs 1,083.60 crore two years earlier.