KIIFB retains ‘BB’ Fitch Ratings, outlook stable

In the latest rating published this month, the rating agency has also affirmed the KIIFB's ₹5,000 crore medium-term note (MTN) programme and the ₹2,150 crore at an interest rate of 9.723% due in 2024 under the programme at 'BB'

THIRUVANANTHAPURAM

Fitch Ratings has affirmed the Kerala Infrastructure Investment Fund Board's (KIIFB) long-term foreign and local currency Issuer Default Ratings (IDR) at 'BB,' with the assessment that the ''outlook is stable.''

The KIIFB had received a 'BB' rating in the previous years we well. The ratings are meant as an indicator of an entity's relative ability to meet financial commitments.

In the latest rating published this month, the rating agency has also affirmed the KIIFB's ₹5,000 crore medium-term note (MTN) programme and the ₹2,150 crore at an interest rate of 9.723% due in 2024 under the programme at 'BB'. The notes, issued directly by the KIIFB, are unconditionally and irrevocably guaranteed by the State through the Finance Department.

Key rating drivers of the KIIFB have been assessed as a 'very strong' status, ownership and control; a 'very strong' support record; 'strong' socio-political default implications, and 'very strong' financial default implications.

Debt servicing

The rating agency noted that the State government has created a dedicated ring-fenced fund to help the KIIFB's debt servicing. The fund draws on the entire petroleum cess and a progressive step-up share of up to 50% of the motor vehicle tax collected by the State.

The KIIFB was established as the principal funding arm of the Government of Kerala in 1999 by the Kerala Infrastructure Investment Fund Act 1999. Following comprehensive modifications in 2016, it is now a major vehicle for mobilsiing funds for infrastructure development.

The KIIFB has given approval for 912 projects valued at ₹64,344.64 crore to date, according to the Finance Department.