Crisil assigns ratings to Sterlite Power's InvIT

Ratings agency Crisil has assigned its first rating CCR AAA to the Rs 2,500 crore InvIT by Sterlite Power Grid Ventures (SPGVL) which has been given approved by market regulator Sebi.
SEBI gave the approval Last month to Sterlite to launch infrastructure investment trust (InvIT) IndiGrid to raise money.
The trust proposes to acquire two stable revenue -generating transmission assets, including Bhopal Dhule Transmission Company and Jabalpur Transmission Company, from SPGVL.
"The corporate credit rating of CCR AAA is a reflection of stability of cash flows of the two underlying operational transmission assets that IndiGrid proposes to acquire," Crisil Ratings Senior Director Sudip Sural said.

Sterlite Power had filed the application for the same with the market regulator in June.
"Besides significant deleveraging at the asset level, the trust is expected to lead to a strong debt service coverage ratio at the consolidated level. We also expect that distribution of cash flows from IndiGrid to its unit-holders will take place only after servicing of external debt thereby lending support to the financial risk profile," he said.

An infrastructure investment trust (InvITs) offers an opportunity for promoters to sell their stake in completed projects to the trust, which in turn can raise long-term and tax-free funds from unit holders.

The rating reflects stable revenue of the operational special purpose vehicles (SPVs) to be acquired by IndiGrid, cash flow stability under the point of connection (PoC) pool mechanism, and a strong financial risk profile due to de-leveraging of these SPVs.
"These strengths are partially offset by moderate operations and management risks that the underlying assets of the SPVs are exposed to," Sural said.
Crisil explained that based on the situation that there would be minimal structural subordination of cash flows as no debt is expected to be raised at IndiGrid level and regulations enable the cash generated by the SPVs to be up-streamed to InvIT with minimum leakages, it has given this rating.

IndiGrid is expected to have a strong financial risk profile because of zero debt at a standalone level and significant deleveraging at both the SPVs, the agency said.
The proceeds from the listing of IndiGrid (to be infused through nonconvertible debentures in BDTCL and JTCL) will be used to repay external debt as well as unsecured loans from SPGVL in these SPVs.