S&P 'BBB-' to India Infrastructure Finance Co; outlook stable
Standard & Poor's Ratings Services has assigned 'BBB-' long-term foreign and local currency issuer credit ratings on India Infrastructure Finance Co. Ltd. The outlook is stable.
By INDIATIMES NEWS NETWORK |
MUMBAI: Standard & Poor's Ratings Services has assigned 'BBB-' long-term foreign and local currency issuer credit ratings on India Infrastructure Finance Co. Ltd. The outlook is stable.
"The ratings on IIFCL are supported by the company's position as the nodal agency for the government to promote long-term financing of the infrastructure sector," said Standard & Poor's credit analyst YeeFarn Phua.
"The ratings on IIFCL benefit from the support it receives from the government in several forms, including the use of guarantees and capital injections. This support results in IIFCL's ratings being equalized to that of the sovereign, India (BBB-/Stable/A-3). On the other hand, the company's low capitalization levels and moderate earnings profile constrain its stand-alone creditworthiness."
Standard & Poor's believes that the strength of government support for IIFCL at this stage offsets uncertainties relating to the company's start-up nature and the long-term viability of its public-policy mandate. However, IIFCL's role could diminish in the future once India's capital market matures and becomes more conducive to the raising of long-term capital for infrastructure projects.
"The stable outlook takes into account our expectation that IIFCL's strategic role as a policy instrument of the government to promote infrastructure financing will prevail in the medium term. Any signs of a change in IIFCL's policy role, reduction in government support, or move to significantly reduce the government's stake in IIFCL could erode the obligation or incentive for the government to support the entity and thus affect the ratings," Phua noted.
"The ratings on IIFCL are supported by the company's position as the nodal agency for the government to promote long-term financing of the infrastructure sector," said Standard & Poor's credit analyst YeeFarn Phua.
"The ratings on IIFCL benefit from the support it receives from the government in several forms, including the use of guarantees and capital injections. This support results in IIFCL's ratings being equalized to that of the sovereign, India (BBB-/Stable/A-3). On the other hand, the company's low capitalization levels and moderate earnings profile constrain its stand-alone creditworthiness."
Standard & Poor's believes that the strength of government support for IIFCL at this stage offsets uncertainties relating to the company's start-up nature and the long-term viability of its public-policy mandate. However, IIFCL's role could diminish in the future once India's capital market matures and becomes more conducive to the raising of long-term capital for infrastructure projects.
"The stable outlook takes into account our expectation that IIFCL's strategic role as a policy instrument of the government to promote infrastructure financing will prevail in the medium term. Any signs of a change in IIFCL's policy role, reduction in government support, or move to significantly reduce the government's stake in IIFCL could erode the obligation or incentive for the government to support the entity and thus affect the ratings," Phua noted.
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