Moody’s Ratings has changed the outlook on Adani Ports and Special Economic Zone’s (APSEZ) ratings from negative to stable, maintaining an ‘Baa3’ investment grade rating. This adjustment reflects confidence in APSEZ’s creditworthiness and long-term financial prospects. The global brokerage also affirmed the Baa3 senior secured ratings of Adani Transmission Step-One Limited (ATSOL) and Adani Electricity Mumbai Limited (AEML), as well as the ‘(P)Baa3 senior secured MTN programme ratings’ for Adani Electricity Mumbai Limited (AEML), India’s leading integrated power utility company.
APSEZ is expected to uphold strong access to liquidity and a credit profile in line with its Baa3 rating over the next 12-18 months, according to Moody’s Ratings. The firm’s robust financial standing is supported by the discretionary nature of its planned capital spending for growth and funding access. All ratings have been shifted to stable from negative, indicating the expectation that ATSOL and AEML will maintain liquidity access and a credit profile supportive of their investment grade ratings in the coming 12-18 months.
The ratings upgrade rationale includes the affirmation of ATSOL’s senior secured bond ratings, reflecting its close credit ties with wholly owned parent Adani Energy Solutions Limited (AESL). This connection is due to AESL’s guarantee on the rated bonds and the event of default provisions linked to AESL’s insolvency. AESL’s credit profile, in turn, benefits from a diversified portfolio of quality transmission and distribution assets with supportive regulatory regimes or long-term contracts with fixed tariffs.
Moody’s Ratings anticipates that AESL’s funds from operations (FFO)/net debt will slightly exceed the minimum tolerance level of 7.5 per cent over the next one to two years, factoring in the incremental debt needed to fund substantial capital spending. The trajectory of AESL’s metrics will be influenced by the actual timing of capital spending and the associated debt incurrence. Additionally, the affirmation of AEML’s senior secured bond ratings is based on the predictable revenue from its regulated utility business in Mumbai.
