Airport recovery unlike before 2024, says S&P
The hit to the India infrastructure sector from COVID-19 will still be felt in 2021 even amid an economic recovery following lockdown, said S&P Global Ratings in a report on 23 Nov 2020.
Credit risks are rising because of increasing debt levels and a weakening of counterparties, said the report “India’s Infrastructure Recovery Won’t Be Quick”.
Refinancing remains difficult for speculative grade-rated issuers, it added.
Highlights are:
Airports: Recovery is unlikely before 2024; high capital expenditure and regulatory delays will amplify refinancing risks.
The sector faces:
Regulatory order: More than one-year delay or tariff levels 10% lower than previous expectations.
Capex inflexibility and high interest/debt burden with limited EBITDA interest coverage headroom.
Limited alternatives for upcoming maturities in 2021/2022, putting liquidity under pressure.
Power: The segment will be operationally resilient, but significant overdue receivables are downside risks.
The sector face:
Working capital change in 2021, net-off receipts under liquidity package.
Higher Capex than 2020.
Debt-to-EBITDA above 6x, funds from operations to debt below 8%-9%.
Ports: A recovery is likely to be gradual and varied after a moderate deterioration.
The sector has a more than 10% drop in cargo/container volumes. It is also impacted by the underperformance of India’s GDP growth and global trade growth levels.
Roads: A steep fall has been followed by a sharp recovery; giving confidence that traffic risk will subside, said S&P. #tenders #projects #banking #infrastructure #economy #exports /fiinews.com
