Infrastructure Loan

Infrastructure loan tenures typically range from 5 to 15 years, depending on the project type, asset life, and cash flow generation pattern. Power and renewable energy projects often qualify for longer tenures (10-15 years), while transportation projects might get 7-12 years. Telecommunications infrastructure usually has shorter tenures of 5-8 years due to technology obsolescence risks. The tenure is aligned with the project's expected revenue generation timeline and includes an appropriate moratorium period during the construction phase.

Infrastructure loans are primarily secured by the project assets themselves, through a comprehensive security package that typically includes:

- First charge on all project assets (land, buildings, plant & machinery) - Assignment of project contracts, licenses, and insurance policies - Pledge of promoter shares in the project company - Debt Service Reserve Account (DSRA) covering 3-6 months of debt obligations - Escrow mechanism for project cash flows

In some cases, additional security in the form of corporate or personal guarantees from sponsors may be required, especially during the construction phase or for projects with significant market risks.

Yes, most infrastructure loans include a moratorium period during which only interest payments are required, while principal repayment is deferred. The moratorium period typically covers the construction phase plus 3-6 months after commercial operations begin. This allows the project to establish stable operations and start generating revenue before full debt service begins.

The length of the moratorium depends on the project type and implementation timeline:
- Power plants: 24-36 months - Road projects: 24-30 months - Water treatment plants: 18-24 months - Telecommunications infrastructure: 12-18 months

During the moratorium, periodic interest servicing is still required, which can either be paid from equity funds or can sometimes be funded from the loan (interest during construction).

The standard debt-to-equity ratio for infrastructure projects typically ranges from 70:30 to 80:20, meaning 70-80% of the project cost is financed through debt and 20-30% through equity contribution. However, this ratio varies based on several factors:

- Project risk profile: Higher-risk projects require more equity (65:35 or even 60:40) - Revenue predictability: Projects with assured offtake/revenue can achieve higher leverage (up to 85:15) - Sector norms: Power projects often achieve 75:25, while transportation may be limited to 70:30 - Regulatory requirements: Some sectors have mandated minimum equity requirements

We assess each project individually and structure the optimal debt-equity mix based on project viability, cash flow strength, and risk assessment.

Our risk evaluation process for infrastructure projects involves a comprehensive assessment across multiple dimensions:

Technical risks: We evaluate construction complexity, technology maturity, contractor credentials, and implementation plan feasibility through independent technical consultants.

Market risks: We assess demand projections, competitive landscape, tariff/pricing structure, and long-term market sustainability for the infrastructure services.

Financial risks: We analyze project costs, funding structure, interest rate sensitivity, foreign exchange exposure, and financial model robustness with stress testing.

Regulatory/Political risks: We evaluate the regulatory framework stability, compliance requirements, governmental support, and political environment impact.

Environmental/Social risks: We assess environmental impacts, social considerations, land acquisition issues, and sustainability aspects.

For each risk category, we require appropriate mitigation measures before proceeding with financing.

Yes, infrastructure loans can be refinanced, and we offer refinancing options for operational infrastructure projects. Refinancing becomes particularly attractive once a project has successfully completed construction, commenced operations, and established a stable cash flow track record.

Benefits of refinancing may include:
- Lower interest rates compared to construction phase financing - Extended loan tenures to improve cash flow - Release of restrictive covenants or guarantees - Increased debt capacity for expansion - Improved debt service coverage ratio (DSCR)

Typically, projects become eligible for refinancing after completing 1-2 years of successful operations with consistent debt servicing. Our refinancing solutions are tailored to the specific needs and performance metrics of the operational infrastructure asset.