Credit risks rising for infrastructure projects in India, says S&P

The hit to India’s infrastructure sector from the Covid-19 pandemic will continue to be felt in 2021, even as the economy revives following the lifting of the nationwide lockdown, according to rating agency Standard & Poor’s (S&P).

Credit risks are rising because of increasing debt levels and a weakening of counter parties. Refinancing remains difficult for speculative grade-rated issuers, the rating agency said in its presentation on ‘India’s Infrastructure Recovery Won’t Be Quick’.

Roads

Dwelling on the specific segments of Indian infrastructure, the agency said in the roads segment, a steep fall has been followed by a sharp recovery. This gives confidence that traffic risk will subside. The annuity road projects are insulated from traffic risk.