Business Daily from THE HINDU group of publications
Saturday, Dec 20, 2008
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Business Daily from THE HINDU group of publications Saturday, Dec 20, 2008 ePaper | Mobile/PDA Version | Audio | Blogs |
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Industry & Economy
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Infrastructure Fitch suggest innovative approach to infra funding
Like in matured markets, infrastructure projects need to be funded with lower interest rates keeping a long-term view. Our Bureau Hyderabad, Dec. 19 Rating agency Fitch has suggested that the approach to infrastructure finance calls for change to ensure project viability. It also hinted at loan restructure for some of the infrastructure projects over the next few years. “While funding we need to take a long-term perspective factoring economic fluctuations rather than always looking at a growing economy,” according to Mr N. Nandakumar, Director-Global Infrastructure Projects Finance Group, Asia Pacific, Fitch Ratings. The recent economic meltdown, liquidity crunch and the credit squeeze that followed bring to the fore some short-sighted approaches to project financing. Most of the projects factored a rapidly growing economy and shorter timelines. With the slowdown, scores of infrastructure projects are now faced with credit crunch. Interest ratesLike in matured markets, infrastructure projects need to be funded with lower interest rates keeping a long-term view, he said. Speaking to newspersons here during a meeting on Infrastructure Finance in India: Lessons from Frontline, here on Friday, Mr Nandakumar said: “Some of the long-term public-private partnership model projects are being funded with negative grant. We believe that this is not an appropriate model.” During the year, Fitch has rated the debt of number of infrastructure project finance vehicles in roads, airports, water and power, which brings to the fore the risk profile of new infrastructure asset classes as well as the lending behaviour of Indian commercial banks. Fitch is of the view that while the demand for infrastructure will far exceed availability for the foreseeable future, the long-term economic values of many of these assets remain strong. Fitch found that the pricing of project risks has varied and depends upon the availability of capital. Govt cuts excise duty, offers sops for key export sectors Difficult times ahead, says Deepak Parekh More Stories on : Infrastructure | Credit Rating
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