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.
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.