New Delhi: Highlighting the challenges faced by infrastructure projects in India, global rating agency Fitch on Wednesday said that many of these projects will have to undergo loan restructuring over the next few years.
“Fitch expects a fair amount of loan restructuring to take place over the next few years, as a wave of projects exit the construction phase and enter operations,” the rating agency said in a report.
These projects will face either interest reset or loan refinancing dates. This will coincide with the ramping up of project usage and revenues, and a more challenging financial market environment, Fitch added.
The rating agency further stated that demand for infrastructure will far exceed availability and the long-term economic value of many of these assets remain strong.
It said that the pricing of project risks has varied over time and depends more on the capital availability and the nature of sponsor-bank relationships, than on a broader and more rigorous evaluation of project fundamentals.
“For India’s emerging infrastructure programme and its enormous financing needs, the prospects of competing capital requirements from old and new projects could not have come at a worse time,” Fitch said.
Many projects carry a heavy debt load, which also constrains the ratings profile, the report added. However, it said that many rated projects have favourable economic profiles, which means having some debt carrying capacity.
Meanwhile, Planning Commission deputy chairman Montek Singh Ahluwalia on Tuesday said he would request government to increase public spending in the infrastructure sector as private sector investment in the segment has also slowed down.
Ahluwalia also said a committee would identify sectors where more funds could be provided.