India Ratings to start rating IDFs

India Ratings to start rating IDFsGlobal rating agency Fitch's Indian arm will soon start rating infrastructure debt funds (IDFs) that would make them a more credible option for investors, Department of Economic Affairs Secretary Arvind Mayaram announced on Monday.

Getting their own investment rating would help IDFs in winning trust of foreign investors as they would be able to assess whether or not their investments in a particular IDF would give them the kind of return they expect.

Making the announcement, Mayaram said, "India Ratings has come out with a new product for rating of IDFs. This is very important because this will give confidence to investors especially from overseas Sovereign Wealth Fund and pension funds and others."

Mayaram added that the rating would be extremely helpful after the MoU for takeout finance signing between IL&FS Infrastructure Debt Fund and eight lenders, viz. Allahabad Bank, Indian Overseas Bank, BOI, Canara Bank, Indian Bank, OBC, UCO Bank and Central Bank of India.

The move will be very helpful as it would help lenders clean up their balance sheets, which would help make them ready to on-lend further to new projects.

During the ongoing 12th Five Year Plan, India needs estimated $1 trillion for development of infrastructure; and banks are expected to keep on playing critical role in providing debt finance for new infrastructure projects.