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

Developers may also be able to refinance remaining debt at lower interest rates

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.