Credit Analysis & Research (CARE) assigned 'BBB (SO)' ratings to Jet Airways India's proposed long-term foreign currency term loan of Rs 25 billion.

CARE assigned 'BBB (SO)' ratings to the company's proposed long term foreign currency term loan of Rs 9.38 billion.

The rating derives strength from the proposed escrow arrangement assigning the identified underlying receivables of Jet Airways India (JAL), by way of security in favour of the security trustee. The credit rating is subject to JAL ensuring compliance with the proposed escrow structure.

The rating reflects the strategic and growing business, especially post take-over of 24% equity stake by Etihad Airways that backs the pool of the underlying receivables and moderate debt service coverage indicators. 

The rating is, however, constrained by seasonality and volatility associated with the generation of the receivables, micro and macroeconomic factors which may influence passenger traffic and travel on the selected routes and competition from other carriers. 

The rating is sensitive to change in the credit quality of JAL, considerable loss of market share and any event risk (such as natural disasters and civil disturbance) which could cause a sudden drop in air travel and the consequent international card sales.

The 'in-principle' rating will be confirmed after the executed and signed documents as per the defined structure along-with legal opinion on the same are provided to CARE to its satisfaction. 

Shares of the company gained Rs 5.2, or 1.89%, to settle at Rs 279.90. The total volume of shares traded was 421,926 at the BSE (Thursday).