Credit risks rising for infrastructure sector in India
ECONOMY & POLICY

Credit risks rising for infrastructure sector in India

India’s infrastructure sector will not cease to suffer from the post-Covid heat in 2021 due to increasing debt, difficulty in refinancing and weakening of counterparties, as reported by global credit rating agency Standard & Poor’s. In a presentation titled “India’s infrastructure recovery won’t be quick”, they stated that refinancing for speculative grade-rated issuers will remain strenuous.

Thanks to the quick recovery in the roads segment post the steep fall, road projects are expected to be safeguarded from traffic risk. However, the airports segment’s recovery seems improbable before 2024. The refinancing risks in this sector are cause by excess capital expenditure and regulatory delays. According to the report, with high fixed costs as well as limited operating levers, the profitability will come under pressure.

With three consecutive months of demand growth, the demand recovery in the power segment appears to be sustainable. Despite heavy overdue receivables, the segment will be operationally resilient..

The weak companies in the distribution sector(discoms) have been adversely affected by the massive increase in overdue receivables post-March. The structural issues faced by the sector cannot be overcome despite the provision of the liquidity relief loan. The report also said that the States’ inadequate support to these discoms adds to the strain.

Gradual recovery is expected for ports, in tandem with the gross domestic product.

India’s infrastructure sector will not cease to suffer from the post-Covid heat in 2021 due to increasing debt, difficulty in refinancing and weakening of counterparties, as reported by global credit rating agency Standard & Poor’s. In a presentation titled “India’s infrastructure recovery won’t be quick”, they stated that refinancing for speculative grade-rated issuers will remain strenuous. Thanks to the quick recovery in the roads segment post the steep fall, road projects are expected to be safeguarded from traffic risk. However, the airports segment’s recovery seems improbable before 2024. The refinancing risks in this sector are cause by excess capital expenditure and regulatory delays. According to the report, with high fixed costs as well as limited operating levers, the profitability will come under pressure. With three consecutive months of demand growth, the demand recovery in the power segment appears to be sustainable. Despite heavy overdue receivables, the segment will be operationally resilient.. The weak companies in the distribution sector(discoms) have been adversely affected by the massive increase in overdue receivables post-March. The structural issues faced by the sector cannot be overcome despite the provision of the liquidity relief loan. The report also said that the States’ inadequate support to these discoms adds to the strain. Gradual recovery is expected for ports, in tandem with the gross domestic product.

Next Story
Infrastructure Energy

REC Transfers HVDC Project to Power Grid

REC Limited has successfully handed over the Special Purpose Vehicle (SPV) for a High-Voltage Direct Current (HVDC) transmission project to Power Grid Corporation of India Limited (PGCIL). This strategic move aligns with the nation's objectives to strengthen its power transmission network. Key Highlights: Project Overview: The HVDC project, under the inter-state transmission system (ISTS) initiative, is a critical component of India's push toward robust and efficient electricity transmission. It aims to handle bulk power transfer across long distances while ensuring minimal losses. Role of RE..

Next Story
Infrastructure Transport

NF Railway Collaborates with IIT Guwahati

The Northeast Frontier (NF) Railway has signed strategic Memorandums of Understanding (MoUs) with IIT Guwahati to foster technological advancements and improve railway operations in the region. This partnership focuses on innovative solutions to enhance safety, efficiency, and sustainability in rail infrastructure. Key Highlights: Purpose of MoUs: The collaboration aims to leverage IIT Guwahati's expertise in technology and research for implementing cutting-edge solutions across railway operations. Key areas of focus include: Automation and digitization in maintenance. Sustainability initiati..

Next Story
Infrastructure Transport

Danapur Division Modernization Plans Revealed

The Railway Board has unveiled ambitious plans for the expansion and modernization of the Danapur Division, a critical hub under the East Central Railway. The initiative focuses on infrastructure development, enhanced passenger amenities, and operational efficiency. Key Highlights: Scope of Modernization: The Railway Board's blueprint emphasizes: Upgrading existing infrastructure to accommodate more passenger and freight traffic. Improving station facilities, such as platforms, waiting areas, and connectivity. Introducing advanced signal systems for safer and smoother operations. Freig..

Hi There!

"Now get regular updates from CW Magazine on WhatsApp!

Join the CW WhatsApp channel for the latest news, industry events, expert insights, and project updates from the construction and infrastructure industry.

Click the link below to join"

+91 81086 03000