‘Debt fully secured’: S&P affirms Adani Green’s rating at ‘BB+’

Global rating agency S&P on Friday removed Adani Green Energy Limited from under observation and affirmed its rating on the company at ‘BB+’ – a development that could calm panicked investors of Hindenburg-hit Adani Group.

On December 14 last year, the agency published its revised criteria for rating project finance transactions and placed Adani Green Energy Ltd under criteria observation. The agency on Friday said it has completed its review of AGEL RG2 and “believes the revised criteria does not impact our assessment of the project’s creditworthiness”.

Also read: Good news for Adani Transmission shareholders! Fitch affirms firm’s rating at ‘BBB-‘; outlook stable

AGEL RG2 consists of three operating entities – Wardha Solar (Maharashtra) Ltd, Kodangal Solar Park Ltd, and Adani Renewable Energy (RJ) Ltd. These entities are the co-issuers and co-guarantors of the $362.5 million senior secured fixed-rate 20-year bond. The three issuers collectively own and operate a portfolio of 10 solar assets in two states in India, with 570 megawatts (MW) of installed capacity.

S&P said that AGEL RG2’s debt is fully secured and has cash flow waterfalls that prioritise operating expenditure and debt service over distributions. “Given the ring-fenced assets, in our view, the structure sufficiently protects investors,” it said, adding that AGEL RG2 is currently not impacted by the governance risks and funding challenges for the larger Adani Group.

This comes a day after Fitch Ratings affirmed the ‘BBB-‘ ratings on the $400-million senior secured notes issued by Adani Transmission Ltd. The outlook of the embattled Adani Group company is stable, the rating agency said.

Fitch said the credit assessment of the restricted group reflects the project companies’ availability-based revenue under a supportive regulatory framework, with low technical complexity, reflected in high availability levels and operating performance that we expect to remain stable.

The Adani Group has been rocked by a damaging report by US-based short-seller Hindenburg Research. The report, published on January 24, has accused the Indian conglomerate of stock manipulation and fraud using shell firms. In its report, the short-seller said key listed Adani companies have taken on substantial debt, including pledging shares of their “inflated stock” for loans, putting the entire group “on precarious financial footing”.

The report sparked fears among investors about the mounting debts and triggered massive sell-offs in group stocks. In the last one month, shares of Adani Green Energy Ltd have crashed nearly 74 per cent. On Friday, the stocks plunged 5 per cent and settled at Rs 486.50.

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