InvITs ‘to help sponsor firms deleverage ₹13,000-cr debt’

Ksenia Kondratieva Mumbai | Updated on January 11, 2018

Ind-Ra report says infra companies will be able to refinance residual debt cheap

The first four infrastructure investment trusts (InvITs), which are likely to hit the primary market in the current fiscal, could reduce the overall debt of sponsor groups by around ₹13,000 crore, providing cash flow relief to the stressed infrastructure sector, India Rating and Research (Ind-Ra) has projected.

Ind-Ra estimates that post the IRB InvIT issue — the first infrastructure trust launched in India and promoted by toll-road developer IRB Infrastructure Developers — its consolidated external debt would amount to ₹770.45 crore by the end of the current fiscal. Post receipt of subscription proceeds, analysts expect IRB to deleverage around 77.5 per cent of its ₹3,513-crore debt.

Another listing — of India Grid InvIT promoted by Sterlite Power Grid Ventures (SPGV) — is scheduled for May 17. Reliance Infrastructure and IL&FS Transportation Networks (ITNL) are among other companies that are likely to deleverage by using the InvIT route this year, according to the Ind-Ra report.

Low interest regime

As bank financing for infrastructure has been on a decline, investors and developers in the sector were looking for alternative sources of funding.

InvITs and masala bonds have emerged as options, and the current low-interest regime is favourable as much for InvITs as for the bond market, note Ind-Ra analysts.

At the same time, going the InvIT route will not only enable infrastructure developers deleverage their balance sheets, but also refinance the remaining debt (potentially ₹3,600 crore) at a lower cost since deleveraging will improve the coverage metrics of the SPVs.

Published on May 10, 2017

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