Yahoo Finance

Rating Action: Moody's assigns (P)Ba2 rating to Clean Renewable Power's senior notesGlobal Credit Research - 15 Mar 2021Singapore, March 15, 2021 -- Moody's Investors Service has assigned a (P)Ba2 rating to the proposed six-year USD senior unsecured notes to be issued by Clean Renewable Power (Mauritius) Pte. Ltd (Clean Renewable Power).The outlook is stable.Clean Renewable Power will use the proceeds from the USD notes with a partial amortizing debt structure to extend six-year external commercial borrowings (ECBs) to a newly formed restricted group (RG) comprising eight subsidiaries that are indirectly wholly-owned by Hero Future Energies Private Limited (HFEPL) through holding companies in India. The restricted subsidiaries, in turn, will use the INR proceeds to repay all their outstanding external debt and intercorporate loans, as well as for general corporate purposes.The restricted subsidiaries must make matching payments to Clean Renewable Power under the INR debt issuance so that Clean Renewable Power can service the USD senior unsecured notes. At the bond's maturity, Clean Renewable Power will redeem the ECBs, and will use the proceeds to repay the USD bond principal.The holders of the USD notes will benefit from a floating charge over all assets of Clean Renewable Power as well as a pledge over all its shares. The ECBs will not be part of the security package for the USD notes.As the holder of the ECBs, Clean Renewable Power will benefit from a collateral package, including (1) an irrevocable and unconditional parent guarantee from HFEPL that covers the full tenor of the ECBs, (2) a first-ranking charge over the restricted subsidiaries' assets, project accounts and project documents, and (3) a pledge over 51% the restricted subsidiaries' shares.The restricted subsidiaries' renewable energy projects are all located in India (Baa3 negative) and each restricted subsidiary will be liable as a co-issuer for a portion of the ECBs and as a guarantor for the balance. The subsidiaries are: (1) Clean Wind Power (Ratlam) Private Limited, (2) Clean Wind Power (Satara) Private Limited, (3) Clean Solar Power (Dhar) Private Limited, (4) Rajkot (Gujarat) Solar Energy Private Limited, (5) Clean Solar Power (Gulbarga) Private Limited, (6) Clean Wind Power (Piploda) Private Limited, (7) Clean Wind Power (Bableshwar) Private Limited and (8) Bhilwara Green Energy Limited.Moody's will remove the provisional status of the rating upon completion of the transaction on satisfactory terms, including the hedging arrangement and completion of the onshore debt issuance.RATINGS RATIONALE"The (P)Ba2 rating assigned to the proposed notes reflects the underlying credit quality of the RG, given (1) Clean Renewable Power's reliance on cash flow from the RG's ECB repayments to meet its own debt servicing requirements, and (2) the parent guarantee provided by HFEPL over the RG's INR payment obligations under the ECBs," says Abhishek Tyagi, a Moody's Vice President and Senior Analyst.The RG's underlying credit quality, in turn, considers (1) Moody's expectation of stable cash flow underpinned by long-term fixed-tariff power purchase agreements (PPAs) during the bond tenor, (2) the RG's diverse portfolio, (3) the uneven past performance of some of the restricted subsidiaries' projects (4) its moderate financial leverage and (5) its exposure to financially weak counterparties with a history of payment delays.The (P)Ba2 rating is predicated on the successful implementation of the proposed hedging strategy to substantially insulate the RG from currency risk.The terms of the proposed USD notes include a mandatory cash sweep and a trapping of all surplus cash within the RG, which will support the RG's financial metrics in a downside scenario.Moody's expects the RG will have high financial leverage, with funds from operations (FFO) to debt at around 7% in the fiscal year ending March 2022, which is supportive of RG's underlying credit quality. Its FFO/debt will likely improve to 8%-10% over the term of the proposed bond, on the back of the scheduled debt amortization and mandatory cash sweeps.About 54% of the group's capacity is contracted with state-owned distribution companies at set tariffs under PPAs that have an average remaining term of 18.3 years, providing predictable cash flow for the RG.About 10% of the RG's contracted capacity will expire during the term of the proposed bond, thereby exposing the RG to a likely reduction in tariffs, given the sustained fall in the cost of renewable energy generation in recent years. This includes 49.5 megawatts of capacity sold to distribution companies under shorter contracts that will expire in 2026.However, this risk is manageable because of (1) lower tariffs assumed under Moody's base case, (2) the fact that the 10% of the contracted capacity will expire only within the final 18 months of the proposed bond term, and (3) the competitiveness of the group captive projects relative to the grid tariff, which supports contract renewal.The RG faces manageable refinancing risk, recognizing (1) the scheduled amortization including the mandatory cash sweep equivalent to around 30% of the original principal, and (2) all surplus cash being captured in the RG for all six years of the bond tenor.In terms of environmental, social and governance (ESG) factors, the RG benefits from positive macroeconomic and sectoral trends in renewable energy and thus has low exposure to carbon transition risk. The group's renewable energy business is aligned with India's target to reduce its carbon footprint and meet its nationally determined contributions.At the same time, HFEPL and the RG's governance practices benefit from its diversified shareholder base, comprising reputable investors: the Munjal family, International Finance Corporation and Masdar.RATIONALE FOR STABLE OUTLOOKThe stable outlook reflects Moody's expectation of stable cash flow from the RG's long-term PPAs and the successful renewal of its expiring contracts, as well as the absence of construction risks for the RG's portfolio of assets.FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGAn upgrade of the rating is unlikely, given the limited opportunities available to the RG to meaningfully increase its revenue, both organically and on a sustained basis. Over time, Moody's could upgrade the rating if the RG's FFO/debt exceeds 12% on a sustained basis.Moody's could downgrade the rating if (1) the RG's operating performance weakens as a result of sustained liquidity stress or a decline in its FFO/debt to below 5% on a sustained basis, or (2) its offtakers' credit quality declines to an extent that would pressure the RG's standalone credit quality.The principal methodology used in this rating was Power Generation Projects Methodology published in July 2020 and available at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1236893. Alternatively, please see the Rating Methodologies page on www.moodys.com for a copy of this methodology.Clean Renewable Power (Mauritius) Pte. Ltd (Clean Renewable Power) is a special-purpose vehicle incorporated in Mauritius that is wholly owned by Hero Future Energies Asia Pte. Ltd. (HFE). HFE, in turn, is 100% owned by Hero Future Energies Global Limited (HFE UK). The restricted subsidiaries issuing the ECBs are ultimately majority-owned by HFE UK.The RG, which comprises Clean Renewable Power -- the issuer of the senior unsecured notes -- and eight Indian operating subsidiaries, operates 504.5 megawatts (MW) of wind and solar power plants (231.5 MW in wind and 273 MW in solar) across three Indian states -- Maharashtra, Madhya Pradesh and Karnataka.REGULATORY DISCLOSURESFor further specification of Moody's key rating assumptions and sensitivity analysis, see the sections Methodology Assumptions and Sensitivity to Assumptions in the disclosure form. Moody's Rating Symbols and Definitions can be found at: https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_79004.For ratings issued on a program, series, category/class of debt or security this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series, category/class of debt, security or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides certain regulatory disclosures in relation to the credit rating action on the support provider and in relation to each particular credit rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.For any affected securities or rated entities receiving direct credit support from the primary entity(ies) of this credit rating action, and whose ratings may change as a result of this credit rating action, the associated regulatory disclosures will be those of the guarantor entity. Exceptions to this approach exist for the following disclosures, if applicable to jurisdiction: Ancillary Services, Disclosure to rated entity, Disclosure from rated entity.The rating has been disclosed to the rated entity or its designated agent (s) and issued with no amendment resulting from that disclosure.This rating is solicited. Please refer to Moody's Policy for Designating and Assigning Unsolicited Credit Ratings available on its website www.moodys.com.Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review.Moody's general principles for assessing environmental, social and governance (ESG) risks in our credit analysis can be found at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1243406.At least one ESG consideration was material to the credit rating action(s) announced and described above.The Global Scale Credit Rating on this Credit Rating Announcement was issued by one of Moody's affiliates outside the EU and is endorsed by Moody's Deutschland GmbH, An der Welle 5, Frankfurt am Main 60322, Germany, in accordance with Art.4 paragraph 3 of the Regulation (EC) No 1060/2009 on Credit Rating Agencies. Further information on the EU endorsement status and on the Moody's office that issued the credit rating is available on www.moodys.com.The Global Scale Credit Rating on this Credit Rating Announcement was issued by one of Moody's affiliates outside the UK and is endorsed by Moody's Investors Service Limited, One Canada Square, Canary Wharf, London E14 5FA under the law applicable to credit rating agencies in the UK. Further information on the UK endorsement status and on the Moody's office that issued the credit rating is available on www.moodys.com.Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating.Please see the ratings tab on the issuer/entity page on www.moodys.com for additional regulatory disclosures for each credit rating. Abhishek Tyagi Vice President - Senior Analyst Project & Infrastructure Finance Moody's Investors Service Singapore Pte. Ltd. 50 Raffles Place #23-06 Singapore Land Tower Singapore 48623 Singapore JOURNALISTS: 852 3758 1350 Client Service: 852 3551 3077 Terry Fanous MD-Public Proj & Infstr Fin Project & Infrastructure Finance JOURNALISTS: 61 2 9270 8141 Client Service: 852 3551 3077 Releasing Office: Moody's Investors Service Singapore Pte. Ltd. 50 Raffles Place #23-06 Singapore Land Tower Singapore 48623 Singapore JOURNALISTS: 852 3758 1350 Client Service: 852 3551 3077 © 2021 Moody’s Corporation, Moody’s Investors Service, Inc., Moody’s Analytics, Inc. and/or their licensors and affiliates (collectively, “MOODY’S”). All rights reserved.CREDIT RATINGS ISSUED BY MOODY'S CREDIT RATINGS AFFILIATES ARE THEIR CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES, AND MATERIALS, PRODUCTS, SERVICES AND INFORMATION PUBLISHED BY MOODY’S (COLLECTIVELY, “PUBLICATIONS”) MAY INCLUDE SUCH CURRENT OPINIONS. MOODY’S DEFINES CREDIT RISK AS THE RISK THAT AN ENTITY MAY NOT MEET ITS CONTRACTUAL FINANCIAL OBLIGATIONS AS THEY COME DUE AND ANY ESTIMATED FINANCIAL LOSS IN THE EVENT OF DEFAULT OR IMPAIRMENT. SEE APPLICABLE MOODY’S RATING SYMBOLS AND DEFINITIONS PUBLICATION FOR INFORMATION ON THE TYPES OF CONTRACTUAL FINANCIAL OBLIGATIONS ADDRESSED BY MOODY’S CREDIT RATINGS. CREDIT RATINGS DO NOT ADDRESS ANY OTHER RISK, INCLUDING BUT NOT LIMITED TO: LIQUIDITY RISK, MARKET VALUE RISK, OR PRICE VOLATILITY. CREDIT RATINGS, NON-CREDIT ASSESSMENTS (“ASSESSMENTS”), AND OTHER OPINIONS INCLUDED IN MOODY’S PUBLICATIONS ARE NOT STATEMENTS OF CURRENT OR HISTORICAL FACT. MOODY’S PUBLICATIONS MAY ALSO INCLUDE QUANTITATIVE MODEL-BASED ESTIMATES OF CREDIT RISK AND RELATED OPINIONS OR COMMENTARY PUBLISHED BY MOODY’S ANALYTICS, INC. AND/OR ITS AFFILIATES. MOODY’S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS DO NOT CONSTITUTE OR PROVIDE INVESTMENT OR FINANCIAL ADVICE, AND MOODY’S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS ARE NOT AND DO NOT PROVIDE RECOMMENDATIONS TO PURCHASE, SELL, OR HOLD PARTICULAR SECURITIES. MOODY’S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS DO NOT COMMENT ON THE SUITABILITY OF AN INVESTMENT FOR ANY PARTICULAR INVESTOR. MOODY’S ISSUES ITS CREDIT RATINGS, ASSESSMENTS AND OTHER OPINIONS AND PUBLISHES ITS PUBLICATIONS WITH THE EXPECTATION AND UNDERSTANDING THAT EACH INVESTOR WILL, WITH DUE CARE, MAKE ITS OWN STUDY AND EVALUATION OF EACH SECURITY THAT IS UNDER CONSIDERATION FOR PURCHASE, HOLDING, OR SALE.MOODY’S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS, AND PUBLICATIONS ARE NOT INTENDED FOR USE BY RETAIL INVESTORS AND IT WOULD BE RECKLESS AND INAPPROPRIATE FOR RETAIL INVESTORS TO USE MOODY’S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS OR PUBLICATIONS WHEN MAKING AN INVESTMENT DECISION. IF IN DOUBT YOU SHOULD CONTACT YOUR FINANCIAL OR OTHER PROFESSIONAL ADVISER.ALL INFORMATION CONTAINED HEREIN IS PROTECTED BY LAW, INCLUDING BUT NOT LIMITED TO, COPYRIGHT LAW, AND NONE OF SUCH INFORMATION MAY BE COPIED OR OTHERWISE REPRODUCED, REPACKAGED, FURTHER TRANSMITTED, TRANSFERRED, DISSEMINATED, REDISTRIBUTED OR RESOLD, OR STORED FOR SUBSEQUENT USE FOR ANY SUCH PURPOSE, IN WHOLE OR IN PART, IN ANY FORM OR MANNER OR BY ANY MEANS WHATSOEVER, BY ANY PERSON WITHOUT MOODY’S PRIOR WRITTEN CONSENT.MOODY’S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS ARE NOT INTENDED FOR USE BY ANY PERSON AS A BENCHMARK AS THAT TERM IS DEFINED FOR REGULATORY PURPOSES AND MUST NOT BE USED IN ANY WAY THAT COULD RESULT IN THEM BEING CONSIDERED A BENCHMARK.All information contained herein is obtained by MOODY’S from sources believed by it to be accurate and reliable. Because of the possibility of human or mechanical error as well as other factors, however, all information contained herein is provided “AS IS” without warranty of any kind. MOODY'S adopts all necessary measures so that the information it uses in assigning a credit rating is of sufficient quality and from sources MOODY'S considers to be reliable including, when appropriate, independent third-party sources. However, MOODY’S is not an auditor and cannot in every instance independently verify or validate information received in the rating process or in preparing its Publications.To the extent permitted by law, MOODY’S and its directors, officers, employees, agents, representatives, licensors and suppliers disclaim liability to any person or entity for any indirect, special, consequential, or incidental losses or damages whatsoever arising from or in connection with the information contained herein or the use of or inability to use any such information, even if MOODY’S or any of its directors, officers, employees, agents, representatives, licensors or suppliers is advised in advance of the possibility of such losses or damages, including but not limited to: (a) any loss of present or prospective profits or (b) any loss or damage arising where the relevant financial instrument is not the subject of a particular credit rating assigned by MOODY’S.To the extent permitted by law, MOODY’S and its directors, officers, employees, agents, representatives, licensors and suppliers disclaim liability for any direct or compensatory losses or damages caused to any person or entity, including but not limited to by any negligence (but excluding fraud, willful misconduct or any other type of liability that, for the avoidance of doubt, by law cannot be excluded) on the part of, or any contingency within or beyond the control of, MOODY’S or any of its directors, officers, employees, agents, representatives, licensors or suppliers, arising from or in connection with the information contained herein or the use of or inability to use any such information.NO WARRANTY, EXPRESS OR IMPLIED, AS TO THE ACCURACY, TIMELINESS, COMPLETENESS, MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OF ANY CREDIT RATING, ASSESSMENT, OTHER OPINION OR INFORMATION IS GIVEN OR MADE BY MOODY’S IN ANY FORM OR MANNER WHATSOEVER.Moody’s Investors Service, Inc., a wholly-owned credit rating agency subsidiary of Moody’s Corporation (“MCO”), hereby discloses that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by Moody’s Investors Service, Inc. have, prior to assignment of any credit rating, agreed to pay to Moody’s Investors Service, Inc. for credit ratings opinions and services rendered by it fees ranging from $1,000 to approximately $5,000,000. MCO and Moody’s Investors Service also maintain policies and procedures to address the independence of Moody’s Investors Service credit ratings and credit rating processes. Information regarding certain affiliations that may exist between directors of MCO and rated entities, and between entities who hold credit ratings from Moody’s Investors Service and have also publicly reported to the SEC an ownership interest in MCO of more than 5%, is posted annually at www.moodys.com under the heading “Investor Relations — Corporate Governance — Director and Shareholder Affiliation Policy.”Additional terms for Australia only: Any publication into Australia of this document is pursuant to the Australian Financial Services License of MOODY’S affiliate, Moody’s Investors Service Pty Limited ABN 61 003 399 657AFSL 336969 and/or Moody’s Analytics Australia Pty Ltd ABN 94 105 136 972 AFSL 383569 (as applicable). This document is intended to be provided only to “wholesale clients” within the meaning of section 761G of the Corporations Act 2001. By continuing to access this document from within Australia, you represent to MOODY’S that you are, or are accessing the document as a representative of, a “wholesale client” and that neither you nor the entity you represent will directly or indirectly disseminate this document or its contents to “retail clients” within the meaning of section 761G of the Corporations Act 2001. MOODY’S credit rating is an opinion as to the creditworthiness of a debt obligation of the issuer, not on the equity securities of the issuer or any form of security that is available to retail investors.Additional terms for Japan only: Moody's Japan K.K. (“MJKK”) is a wholly-owned credit rating agency subsidiary of Moody's Group Japan G.K., which is wholly-owned by Moody’s Overseas Holdings Inc., a wholly-owned subsidiary of MCO. Moody’s SF Japan K.K. (“MSFJ”) is a wholly-owned credit rating agency subsidiary of MJKK. MSFJ is not a Nationally Recognized Statistical Rating Organization (“NRSRO”). Therefore, credit ratings assigned by MSFJ are Non-NRSRO Credit Ratings. Non-NRSRO Credit Ratings are assigned by an entity that is not a NRSRO and, consequently, the rated obligation will not qualify for certain types of treatment under U.S. laws. MJKK and MSFJ are credit rating agencies registered with the Japan Financial Services Agency and their registration numbers are FSA Commissioner (Ratings) No. 2 and 3 respectively.MJKK or MSFJ (as applicable) hereby disclose that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by MJKK or MSFJ (as applicable) have, prior to assignment of any credit rating, agreed to pay to MJKK or MSFJ (as applicable) for credit ratings opinions and services rendered by it fees ranging from JPY125,000 to approximately JPY550,000,000.MJKK and MSFJ also maintain policies and procedures to address Japanese regulatory requirements. ​