Faster Than Expected Deleveraging: Given the monthly release of the debt service reserve account
the transaction has benefited from a faster pace of amortization than originally expected, reducing overall debt service.
A six-month debt service reserve account
is in place.
In addition to its leadership and administrative expertise, HSL has provided financial support in the past and will contribute about $6 million of equity to fund a portion of the debt service reserve account
for the series 2017 bonds.
The above strengths are partially offset by the non-creation of Debt Service Reserve Account
(DSRA) and Major Maintenance Reserve Account (MMRA), a constraint from a credit rating perspective.
In addition to the MRA, the project also features a six-month debt service reserve account
and a change in law reserve.
The rating is further supported by the significant progress on the project, proposed creation of Debt Service Reserve Account
(DSRA) and Major Maintenance Reserve Account (MMRA) and also the complete provisioning for maintenance costs for the first five years of operations, within the EPC cost.
ICRA however takes comfort from the stipulation of debt service reserve account
(DSRA) and trust & retention account (TRA) mechanism as part of loan covenants for the financing of the project by the lenders.
5m in the debt service reserve account
and other financial covenants, RAM Ratings noted.