New Delhi, Feb 6 (PTI) Crisil Ratings has revised the outlook for Adani Green Energy's three assets to 'Positive' while reaffirming its 'AA+' rating.

This is the first outlook revision since the company was implicated in the US over bribery allegations in India.

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"The outlook revision reflects the actual generation being continuously better than the P90 levels for the last four years and timely refinancing of USD 500 million bonds through fully amortised debt structure," the rating agency said.

This revision is for the RG1 or Restricted Group 1 which includes three special purpose vehicles of Adani Green Energy, against which the company issued US dollar bonds in 2019 and refinanced in March last year, for which the company received an overwhelming 7x response. This dollar bond launch was critical for Adani, as it was the first time that India's largest infrastructure group had touched the dollar market since the short-seller report.

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"Crisil Ratings has revised its outlook on the long-term bank facilities and non convertible debentures (NCDs) of Adani Green Restricted Group 1 (AGEL RG 1) namely Prayatna Developers Pvt Ltd (PDPL), Parampujya Solar Energy Pvt Ltd (PSEPL) and Adani Green Energy (UP) Ltd (AGEUP) to 'Positive' from 'Stable' and reaffirmed the rating at 'Crisil AA+'," it said.

This revision is a positive development for the Adani Group and its lenders, following increased scrutiny after the US indictment. Despite external challenges, no entity within the group has experienced rating downgrades over the past two years. In fact, some entities have even seen upgrades.

Interestingly, the group has over 100 entities that are being rated by various rating agencies, but not a single entity has seen ratings downgrade despite all the external challenges and volatilities over the past two years. In fact, several entities have seen ratings upgrade over the past two years.

Crisil said the rating reflects strong revenue visibility for AGEL RG 1 in the form of a long-term power purchase agreement (PPA) at a healthy tariff, co-obligor structure of special purpose vehicles (SPVs) providing diversity benefit, restricted payment and cash trap conditions. These strengths are partially offset by exposure to risks inherent in operating solar-energy assets and adverse movement in foreign exchange (forex).

Crisil Ratings has also withdrawn its rating on non-convertible debentures of Rs 23.6 crore since these matured in December 2024 and have been fully repaid. This has been done on the basis of independent confirmation and request from the company. The withdrawal is in line with Crisil Ratings' policy on the withdrawal of instruments.

Explaining the rating criteria, Crisil said it has combined the business and financial risk profiles of the three SPVs in AGEL RG 1 in line with its criteria for rating entities in homogeneous groups and equated the rating of the individual SPVs to the group.

"The three entities consolidated as AGEL RG 1 are PDPL, PSEPL and AGEUP. The entities are in a homogeneous group since they are in the same line of business of operating solar power assets, have a common management and treasury team and are critical to AGEL RG 1. Each of the SPVs acts as a co-obligor to the other. Post debt servicing in each SPV, excess cash flows are largely available for use across the group. Any deviation in this understanding shall be a key rating sensitivity factor," it said.

All 930 megawatt (MW) projects within AGEL RG 1 SPVs have 25-year PPAs with 9 counterparties. Moreover, 57 per cent of capacity has central counterparties such as Solar Energy Corporation of India and National Thermal Power Corporation. All projects have warranty for solar modules against manufacturing defects for 10 years.

The PPAs have fixed tariff throughout their tenure of 25 years from the start of commercial operations ranging from Rs 4.4 per kilowatt hour (kWh) to Rs 7 per kWh. This lends high revenue visibility and stability to cash flow with low demand risk.

Payment track record across projects has been healthy, with the payment cycle largely in line with the PPA terms in the past few years.

The 930 MW projects have capacity weighted average vintage of over 7 years, providing useful life of well over 19 years after the USD bonds, it added.

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