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Road InvITs improves credit quality of Rs 46k Cr debt: CRISIL


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New Delhi: Infrastructure investment trusts (InvITs) in the roads sector have enhanced the credit quality of around Rs 46,000 crore debt till now, aided by regulatory guardrails and structural benefits, ratings agency CRISIL said on Tuesday.

‘Since 2016, 19 InvITs have been registered in India. These include 11 from the roads sector of which nine have been floated or set to be floated soon. These nine comprise 94 road assets valued over Rs 1.1 lakh crore. Toll roads account for 70% of this, while annuity, annuity plus toll, and hybrid annuity models comprise 13%, 11% and 6%, respectively,’ the agency said.

‘Historically, credit profiles of toll roads had seen challenges such as high leverage, long delays in construction and lower-than-expected traffic. InvITs have addressed many of these problems,’ it said.

Mohit Makhija, Senior Director, CRISIL Ratings, said, “The InvIT structure benefits from a cap on leverage and on under-construction assets, insulating it from the risks of high leverage and delays in project completion. As of date, consolidated leverage of the nine InvITs remains comfortable, with a debt to asset value of 40%. Additionally, pooling of diversified assets mitigates the concentration and geopolitical risks that standalone assets are vulnerable to. These factors have helped improve credit quality of Rs 46,000 crore of debt taken over by InvITs.”

Anand Kulkarni, Director, CRISIL Ratings, said, “InvITs have provided an avenue for road developers to monetise assets, as reflected in 8,700 km of roads already placed under such trusts. These InvITs have attracted capital from large global private equities and pension funds. We expect additional assets of Rs 25,000-30,000 crore to come under InvITs over the next 1-2 years, either through inorganic growth by existing players or through new InvITs being set up.”

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