KUALA LUMPUR (Oct 10): Moody's Investors Services has assigned a first-time corporate family rating of Ba1 to GMR Hyderabad International Airport Ltd (HIAL), which holds a long-term concession to operate India's Hyderabad airport.

The rating is expected to remain stable as it is supported by HIAL's strong market position, strategic location in India's fifth most populous city of Hyderabad, and low business risk due to it paying a low share of concession revenue to the government, the ratings agency said.

"These factors position HIAL well to benefit from continued growth in travel over the next 2-3 years," the ratings agency said in a statement today.

Abhishek Tyagi, a Moody's vice president and senior analyst, added that the airport's core aeronautical revenue stream is not exposed to the risk of fluctuating passenger volumes.

However, downside risk is present in the form of the limited track record of India's regulatory framework and HIAL's significant capital expenditure to expand its capacity, it said. Missteps in the implementation of its 22-25 billion rupee expansion plan, or a reduction in aeronautical or non-aeronautical revenues, could also be causes for a downgrade.

HIAL's expansion programme to increase its terminal capacity, which is to be implemented over the next four years, may see financial leverage worsen over its 2019 and 2020 financial years ending March 31, Moody's said.

The Ba1 rating also factors in Moody's expectation that HIAL will be issuing bonds shortly, the proceeds of which will be used to refinance the existing foreign and domestic currency bank term loan facilities.