The issuers directly own operating assets and are not merely lenders to the operating entities, unlike other rated issuance from most of the Indian restricted groups.
Fitch Ratings has affirmed Adani Green Energy Ltd restricted group 2 (AGEL RG2) 362.5 million dollars senior secured partially amortising notes due in 2039 at BBB-minus.
AGEL RG2 includes three subsidiaries of AGEL. The US dollar notes are issued in part by each of the three special purpose vehicles (SPVs) in the restricted group. The notes are stapled together to mimic the structure of a restricted pool, said Fitch.
The issuers directly own operating assets and are not merely lenders to the operating entities, unlike other rated issuance from most of the Indian restricted groups. All covenants or triggers are on an aggregate basis.
Each SPV guarantees the note obligations of the other two SPVs although the notes constitute each issuer’s obligations only on a several basis.
The rating reflects the credit profile of the restricted group of the three entities that operate solar generation assets across two states in India. The combined capacity is 570 megawatts.
The underlying credit rating on the notes is ‘bbb.’ This underlying credit rating is underpinned by long-term fixed-price power purchase agreements (PPAs), commercially proven technology and experienced operations and maintenance contractors, and is weighed down by the entities’ limited operating track record.
Noteholders benefit from a standard security package and robust covenants restricting distributions. The debt instrument is partially amortising with limited refinancing risk at maturity. “We assume the notes will be refinanced at maturity with the refinancing debt to be amortised across the remaining PPA terms,” said Fitch.
It considers revenue from sovereign-backed Solar Energy Corporation of India (SECI) to which AGEL R2 contracts 61 per cent of its total capacity as fully contracted revenue and apply the fully contracted project threshold. SECI’s credit quality does not constrain the rating as revenue exposure to SECI presents a systematic sector risk.