Moody's upgrades ratings of NHAI to Baa2 from Baa3
New Delhi, November 19: The issuer ratings of National Highways Authority of India (NHAI) have been upgraded to Baa2 from Baa3 by the Moody’s Investors Service. The ratings of NTPC, NHPC, and GAIL have also been upgraded. This reviewed the viewpoint to stable from positive. On 16th November 2017, India's sovereign rating was upgraded from Baa3 positive to Baa2.
In a statement, Moody’s stated that the upgrade in ratings for NTPC, NHPC, NHAI, and GAIL follows the upgrade of the Indian sovereign rating and reproduces the tactical significance of these entities to the country, as well as its close operational and financial links with the government.
On 9th October, NHAI was first time assigned with the Baa3 rating and in a very short time, the National Highways Authority has been upgraded with the Baa2 rating. According to CRISIL, about 80 percent of the operative portfolio comprising nearly 100 BOT projects is at low-risk today in terms of debt servicing.
A report issued by the global rating agency CRISIL on 16th November 2017, stated that improvements by NHAI have ensued in a sharp decline in the percentage of high-risk highways projects from 53 percent two years back to 21 percent now. The reforms that have made this possible include quicker approvals, loan support for suffering projects, termination of stuck projects and their consequent re-awarding.
The CRISIL report also states that NHAI reforms have resulted in doubling of highways construction rate from 12 km per day in 2015 to 23 km per day in 2017. It says the awarding of contracts is expected to sustain given the announcement and subsequent application of Bharatmala project. With the better ground situation, both debt and equity investors are showing more interest in the road sector.