Negative outlook on Indian infrastructure sector maintained by India Ratings
Credit rating and research agency, India Ratings & Research recently said that the overall outlook for the infrastructure sector remains negative for the financial year 2014-2015. The agency is of the view that the outlook for power projects, barring renewables, remains negative, while highways sector remains stable in pockets.
The agency said that it does not expect a sharp positive movement in the infrastructure sector at least in the first half of 2014-2015, post the Lok Sabha elections. However, government’s support in the form of conducive policies may help.
Regarding power, the agency said, the complete benefits of the numerous measures taken by the government will actually trickle down to power-generating project assets post the next financial year. Sounding optimist on the Renewables segment, the agency said that on the back of reduced construction risk, stable operating performance and remunerative tariffs the sector has generated some home, though, it being a “dark” sector.
The agency further noted, “Prolonged uncertainty surrounding economic conditions, over-ambitious traffic estimates and enhanced construction risks (to name a few) have plagued the road sector for some time now. The expected continuance of the current situation in the near term will continue to be a drag on the project cash flows of toll road assets.” The outlook on annuity road projects is “stable” due to assured revenue streams from highly rated counterparties and standard maintenance requirements.
The outlook for the Airport sector has been revised to “stable” for the coming year from “negative”, due to the progress on completion of expansion plans, regulatory clarity on tariff fixation and sustained growth in international traffic (specially against the headwinds of a weak global economy).
Source: The Financial Express
Airport sector, Fitch, India Ratings & Research, infrastructure sector, Lok Sabha elections, Power, power-generating project, renewables, toll road
