Infrastructure Sector Ratings (ISR)
CAREs ISR (Infrastructure Sector Ratings) encompasses ratings assigned to debt programmes
of issuers in the power, roads, telecommunications and other such infrastructure-related sectors.
Of late, these sectors have witnessed considerable private participation considering huge
investments required in these sectors. The infrastructure projects are capital intensive and have a
long gestation period. CARE adopts a separate methodology for evaluation and assignment of
ISR, distinct from corporate sector debt ratings. Demand-related risks are minimal because of
huge demand-supply gap in infrastructure segments while supply-related risks assume paramount
significance in these ratings.
CARE evaluates economic viability of the project being financed, legal risks, contractual
framework, credit enhancement mechanism etc while assigning ISR. Socio-economic viability
assessment is critical as majority of the infrastructure companies have revenues determined or
regulated by the government or specific authorities and are not market driven, lending
inflexibility to their pricing mechanism. Further, credit profiles of respective government bodies
awarding the projects have close linkages with those of infrastructure entities. Consequently, the
impact of respective government policies, funding support/arrangement etc is evaluated in case
of infrastructure sector ratings. Parameters like Sponsor credit profile, financial flexibility, any
credit enhancements extended to the underlying infrastructure entity are also taken in
consideration. ISR involves analyzing the legal framework in greater detail and does not restrict
assessment to financial statements. CARE arrives at an ISR after substantial evaluation and
seeking opinion with various legal experts and/or, technical experts in the respective
infrastructure segment.
CAREs adoption of a distinctive rating methodology for ISR, enables the investors/issuers
/regulators to gather a better perspective on the attributes of the rated entity.
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Disclaimer
CAREs ratings are opinions on credit quality and are not recommendations to sanction, renew,
disburse or recall the concerned bank facilities or to buy, sell or hold any security. CARE has
based its ratings on information obtained from sources believed by it to be accurate and reliable.
CARE does not, however, guarantee the accuracy, adequacy or completeness of any information
and is not responsible for any errors or omissions or for the results obtained from the use of such
information. Most entities whose bank facilities/instruments are rated by CARE have paid a
credit rating fee, based on the amount and type of bank facilities/instruments.