NEW DELHI: Infrastructure sectors will continue to feel the post-Covid heat, as credit risk will remain high and recovery will be slow, said rating agency Standard & Poor’s.In its presentation titled ‘India’s Infrastructure Recovery Won’t Be Quick’, the American rating agency said that credit risks are rising because of increasing debt levels and a “weakening of counterparties. Refinancing remains difficult for speculative grade-rated issuers”.
Going sector-wise, the agency further added that the recovery in the airports’ segment is unlikely before the year 2024, which will amplify refinancing risks. The rating agency also added that the profitability will come under pressure.
Talking about the power sector, S&P’s said, a massive increase in overdue receivables post-March indicates a severe impact on already weak distribution companies (discoms).“The liquidity relief loan will alleviate some pressure, but will not fix structural problems. Weaker states’ ability to support weak discoms will add to the strain,” S&P said.
In ports, the rating agency added that the recovery is likely to be gradual and varied after a moderate deterioration. The recovery too should be in tandem with the GDP growth.On the positive side, the rating agency did said that in the roads segment a steep fall has been followed by a period of sharp recovery. This gives confidence that traffic risk will subside. The annuity road projects are insulated from traffic risk.
‘Refinancing remains difficult’
In its presentation titled ‘India’s Infrastructure Recovery Won’t Be Quick’, the American rating agency said that credit risks are rising because of increasing debt levels and a “weakening of counterparties. Refinancing remains difficult for speculative grade-rated issuers”. On the positive side, the rating agency did said that in the roads segment a steep fall has been followed by a period of sharp recovery. This gives confidence that traffic risk will subside. The annuity road projects are insulated from traffic risk.