State Bank of India is seeking senior creditor status to gain early rights on repayments in case of default or liquidation of the state-owned road authority's investment trust (InvIT), two sources aware of the matter told Reuters.
The lender, the country's largest, has written to the National Highway Authority of India (NHAI) seeking this status on its investments in National Highways Infra Trust (NHIT), the sources said on Monday.
An InvIT is an investment vehicle that raises funds by issuing units. NHIT is the manager of NHAI's InvITs.
The sources requested anonymity as the talks are private. SBI, NHAI and NHIT did not reply to a Reuters mail seeking comment.
The move follows NHAI's plan to raise Rs 20,000 crore ($2.33 billion) by monetising its road assets through InvITs, according to Mint, a business daily.
It has already raised 460 billion rupees through four rounds of InvITs since 2020, including a 183-billion-rupee round in March, India's biggest road monetisation exercise to date.
SBI has significant exposure to India's road sector including projects backed by NHAI's InvITs. In 2018, it signed an agreement with NHAI for a 10-year loan unsecured loan of nearly $3 billion.
Under current rules, InvITs are not governed by India's bankruptcy laws, and typically, the unitholders of these trusts hold priority in the repayment hierarchy, one of the sources said.
SBI has flagged the lack of creditor protection under these regulations for quite some time, the source added.
"The lender is not at all happy with the arrangement and has been discussing the tweaks," the second source said.
As part of the monetisation, NHAI transfers the ownership and operational responsibilities of completed highway stretches to the InvIT, which issues units to investors who are paid from the toll revenues.
InvITs are regulated by the Securities and Exchange Board of India, the country's capital markets regulator.
The total assets under management of five listed and 16 unlisted InvITs in India exceeded 7 trillion rupees as of March-end, according to data from Bharat InvITs Association.
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