Moody's assigns Ba3 rating to Adani Green Energy's senior secured note
Moody's Investors Service has assigned a Ba3 rating to the proposed USD senior secured notes to be issued by Adani Green Energy Limited (AGEL).
Mumbai, Aug 27 Moody's Investors Service has assigned a Ba3 rating to the proposed USD senior secured notes to be issued by Adani Green Energy Limited (AGEL).
The outlook is stable.
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.
Holders of the USD notes will benefit from security with a first-ranking charge over the amounts distributed from the operating entities and projects to AGEL and first-ranking charge over the senior debt reserve account, senior debt amortization account, debt service reserve account and senior debt restricted reserve account.
"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, (2) significant capital spending plans, demonstrated capacity to deliver on growth projects, backed by its experienced management team, and (4) very high financial leverage," says Abhishek Tyagi, a Moody's Vice President and
Senior Credit Officer.
AGEL's operating cash flows are stable, given the geographic diversification of its generation fleet reduces its exposure to potential fluctuations in the availability of solar and wind resources.
Most of AGEL's projects have long-term PPAs with either central government-owned or state government-owned utilities, with predefined tariffs for the duration of the contract. As of June 2021, AGEL's PPAs for operating projects had an average remaining life of around 20 years, which provides visibility over the company's long-term cash flow.
AGEL has outlined a long-term target to grow its generation capacity to around 25 gigawatts (GW) by the end of the fiscal year ending 31 March 2025. This is around 5x its current operational capacity.
The Ba3 rating also considers AGEL's very high financial leverage, primarily driven by additional debt to fund its development commitment of around 20GW. Over the next two to three years, AGEL's financial leverage — as measured by its consolidated cash flow from operations pre-working capital (CFO pre-WC)/debt — will be very high at about 2 per cent-3 per cent.
Moody's leverage metrics captures AGEL's consolidated debt balance, including the debt extended by Total Energies Group (Total, A1 stable) to Adani Green Energy Twenty Three Limited, a joint venture between Total and AGEL.
AGEL's solid operational track record, underpinned by its experienced management and project development teams, will support its delivery of the new projects.
