S&P rates BBB- with outlook stable

S&P Global Ratings believe India Infrastructure Finance Co Ltd’s (IIFCL) will continue to play a critical role in the Indian government’s economic development plans and policies over the next 24 months.

It will remain a key policy instrument to promote infrastructure financing,” said S&P on reaffirming BBB- credit ratings with stable outlook.

It pointed out that IIFCL policy role and operating conditions are spelt out in the government’s Scheme for Financing Viable Infrastructure Projects through a Special-Purpose Vehicle Called ‘The India Infrastructure Finance Co Ltd’ (SIFTI).

This adds stability to IIFCL which is critical for the Government’s massive infrastructure development programmes in India.

As it is, IIFCL’s loans cannot exceed 20% of total project costs under its Direct Lending Scheme, but in the case of the Takeout Finance Scheme, it can go up to 30% of the project cost (inclusive of direct lending), the rating agency pointed out.

“In our view, the 2018-2019 budget announcement to expand the scope of projects that IIFCL can lend to further deepens the public policy role. It reflects Government’s commitment to expand the IIFCL’s scale and scope of operations,” stressed S&P Global Ratings.

The stable outlook on IIFCL also mirrors the outlook on the sovereign credit rating on India (unsolicited rating BBB-/Stable/A-3).

It also reflects S&P assessment of an almost certain likelihood of extraordinary government support for IIFCL in the event of financial distress.

IIFCL is a government-related entity acting under the directives of the Ministry of Finance. fiinews.com