InvITs may deleverage infra firms by nearly Rs 13,000 cr: India Ratings

The first four infrastructure investment trusts (InvITs), which are likely to hit the primary markets this fiscal, may bring down the overall debt of sponsor groups by nearly Rs 13,000 crore, according to India Ratings and Research (Ind-Ra).

The companies which are likely to deleverage by using the InvIT route are Sterlite Power Grid Ventures, Reliance Infrastructure and IL&FS Transportation Networks and the recently closed issue of IRB Infrastructure Developers, Ind-Ra said on Tuesday.

"InvITs will enable infrastructure developers to deleverage their balance sheets and refinance remaining debt at lower costs. Deleveraging will provide a fillip to the coverage metrics of SPVs housed under the InvIT structures and refinancing (through bond/bank loans) and will further improve the credit profile of InvITs," the credit rating agency said.

As per the agency, InvITs would allow infrastructure developers to not only deleverage their balance sheets but also refinance remaining debt at lower interest rates.

In a report, Ind-Ra said that bank financing to the infrastructure sector has been declining, which makes it imperative for investors and developers to scout for alternate sources of funding such as masala bonds, InvITs among others.

The current low interest rates regime is favourable for the bond market as well as InvITs, the agency said.


Dear Reader,


Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.

We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

Business Standard is now on Telegram.
For insightful reports and views on business, markets, politics and other issues, subscribe to our official Telegram channel