Bond market investors should invest in infra assets- Crisil

Bond market investors should invest in infra assets: Crisil

With their credit risk profile and long-term nature showing improvement over the past few years, infrastructure assets are increasingly becoming a preferred investment choice for bond market investors, according to a report by Crisil Ratings.

The agency further said the improvement in the credit risk profile reflects a series of policy measures that has helped boost the attractiveness of the infra sector as an investment destination.

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Entities rated AAA and AA comprised ~46% of the Crisil Ratings infra portfolio (361 companies) last fiscal, compared with ~22% (260 companies) in FY17.

This is also reflected in the median ratings by Crisil portfolio of infra assets improving from ‘BBB’ in FY17 to ‘A+’ last fiscal, it showed.

Gurpreet Chhatwal, MD, Crisil Ratings, said: “The government has taken a slew of measures to address legacy issues in the infrastructure sector. Risk sharing in contracts has improved with the concessioning authorities assuming their fair share of risks, and concession agreements revised to remove bottlenecks.

“Now, central counterparties are playing a greater role, and the introduction of InvITs has boosted investor confidence.”

Government-owned companies such as National Highways Authority of India (NHAI), Solar Energy Corporation of India (Seci), NTPC, and PowerGrid Corporation have ensured predictability in the payment cycles, reducing cash-flow volatility significantly, the analysis said, adding that the IBC and pre-IBC platforms have also improved the recovery prospects and resolution timelines.