India Ratings and Research (Ind-Ra) has assigned L&T Metro Rail Hyderabad's Rs 2.5 billion non-convertible debentures (NCDs) and proposed Rs 7.5 billion NCDs 'IND AA(SO)' and 'Provisional 'IND AA(SO)' ratings, respectively, with stable outlook. The agency has also affirmed company's Rs 114.78 billion bank term loans, Rs 3,600 million bank guarantee facility and Rs 1,240 million derivative facility at 'IND A-' with a stable outlook.

The bond ratings are based on the unconditional and irrevocable undertaking provided by L&T Infrastructure Development Projects (L&T IDPL) to meet debt service if there is a cash shortfall at L&T MRHL.

Additionally, Larsen & Toubro (L&T) has provided a letter of comfort to ensure that L&T IDPL is operated and maintained in a manner so as to timely meet its entire obligation to NCD investors under the transaction documents. L&T will not take any action which will result in L&T MRHL being unable to carry on its business.

The affirmation of the bank loan ratings reflects the reasonably satisfactory construction progress and strong likelihood of completion of stage one of the project by FY16. The ratings also reflect the intention of the government of Telangana to continue to provide full support to the project considering the socio-economic benefits of the project to the state.