Ind-Ra assigns AAA rating to India Grid Trust's MLDs with stable outlook
Apr 29, 2020
Mumbai, (Maharashtra) [India], Apr 29 : IndiGrid, India's first power sector infrastructure investment trust (InvIT), said on Wednesday that India Ratings and Research (Ind-Ra) has assigned AAA rating to its market-linked debentures (MLDs) with a stable outlook.
"The affirmation reflects the stable operations of IndiGrid's asset portfolio till March and adequate liquidity to tide over the disruptions caused by the nationwide lockdown imposed to tackle the COVID-19 spread," said Ind-Ra.
IndiGrid is continuing the operations of its assets as transmission assets are declared as essential services.
"The ratings reflect IndiGrid's strong ability to meet external senior financial obligations, including those of the entities under it and the combined credit quality of the underlying assets, though the ratings do not reflect the ratings of its units," said Ind-Ra.
The acquisition of East North Interconnection Company Ltd (ENICL), an interstate asset, from Sterlite Power Grid Ventures Ltd (SPGVL) and Sterlite Power Transmission was finalised last month.
The entire acquisition with a consideration of Rs 1,020 crore will be debt funded of which Rs 900 crore has already been raised at ENICL.
ENICL experienced damages at river Ganges crossing twice from August 2016 but has faced no disruption to regular tariff because of the events being recognised as force majeure. After the latest force majeure in August 2018, the line route was changed to ensure a larger distance of new towers from the river bed.
In addition, the tower foundation in the river was strengthened and the restoration was completed in December 2019.
According to IndiGrid, extensive mitigation measures to improve the resilience of the asset to flooding will be undertaken at the cost of SPGVL and should be completed within 18 months of signing a share purchase agreement.
Also, any revenue loss during this time period for the improvement measures has to be borne by SPGVL. Suitable features are included in the share purchase agreement, to secure the performance of SPGVL under the contract.
The requirement of any capex due to future damages will not be a threat to debt servicing, given the high debt service coverage expected for IndiGrid.
IndiGrid's total debt as on March 31 was Rs 6,323 crore.
