Moody's assigns 'Ba3' rating to Adani Green's proposed foreign currency bonds

Moody's has assigned a Ba3 rating with a stable outlook to the proposed foreign currency denominated bonds issuance by Adani Green Energy, the company said on Friday. Moody's also said it has assigned a Ba3 rating to the proposed USD senior secured notes to be issued by Adani Green Energy Ltd (AGEL) but added that the outlook is 'stable'.

According to Moody's scale of ratings, obligations rated 'Ba' are judged to be speculative and subject to substantial credit risk.

AGEL will primarily use the proceeds from the USD notes to on-lend to its direct and indirect subsidiaries for them to fund the development of utility-scale renewable power projects.

"The Ba3 rating assigned to AGEL's proposed notes reflects the company's predictable cash flow backed by long-term power purchase agreements (PPAs) that are supported by its large and diversified portfolio of solar and wind generation projects, significant capital spending plans, demonstrated capacity to deliver on growth projects, backed by its experienced management team, and very high financial leverage," says Abhishek Tyagi, Moody's Vice President and Senior Credit Officer.

The stable rating outlook reflects Moody's expectation of AGEL's stable cash flows from long-term PPAs over the next few years and delivery of new projects. Upward rating momentum is unlikely over the next 12-18 months based on AGEL's business profile and financial strategy, it said.

Nonetheless, Moody's could upgrade the rating over time if AGEL sustains a higher consolidated (CFO pre-WC)/debt of above 6 per cent, it stated.

The rating could come under downward pressure if AGEL's credit profile deteriorates on a sustained basis, potentially because of weaker operational performance, a delay in the commissioning of new projects or aggressive acquisitions and capital spending beyond Moody's expectations, the ratings agency said.

AGEL had recorded a 10-fold jump in its consolidated net profit at Rs 219 crore for the June quarter on a YoY basis, mainly on the back of higher revenues.

Total income rose to Rs 1,079 crore in the quarter under review, from Rs 878 crore in the same period a year ago. The acquisition of SoftBank Energy's high-quality renewable energy portfolio has further consolidated the company's position in India.

With PTI inputs

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