Moody’s rates Indian Toll notes Ba2

Moody’s Investors Service said it assigned a (P) Ba2 rating to India Toll Roads planned 3.5 year U.S. dollar senior secured notes. The agency also set a first-time corporate family rating of Ba1 to IRB Infrastructure Developers Ltd.

Indian Toll Roads will use the proceeds to fund its purchase of onshore senior secured non-convertible debentures to be issued by IRB. In turn, IRB will use the debenture proceeds to refinance debt, fund capital expenditure and general corporate purposes.

The (P)Ba2 rating factors in subordination risks for the bondholders primarily because debt service relies on holdco cash flows and, the security provided for the Indian rupee-denominated non-convertible debentures is with a key asset, which already has project finance debt. Security at the dollar bonds level comprises a share pledge of 100% of Indian Toll Roads’ equity and a floating charge over all of its assets except the debentures. Security at the debentures comprises, among other items, a 49% share pledge of the equity of IRB MP Expressway Pvt Ltd. and a charge of the subordinated debt from IRB to IRB MP Expressway Moody’s said.

The outlook is stable.

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