Fitch rates Clean Renewable Power's proposed USD notes first-time BB-minus
Mar 15, 2021
Singapore, March 15 : Fitch Ratings on Monday assigned Clean Renewable Power (CRP) Mauritius Pte Ltd's proposed US dollar senior secured notes due 2027 an expected rating of BB-minus with a stable outlook.
The rating on proposed notes reflects the credit profile of a restricted group of operating entities under Hero Future Energies, a subsidiary of Hero Future Energies Asia, an independent power producer in India with a renewable energy portfolio of more than two gigawatts of capacity, including assets under construction.
CRP is a financing vehicle incorporated in Mauritius and a wholly-owned subsidiary of Hero Future Energies Asia. CRP will use the proceeds of the proposed notes to subscribe to Indian rupee-denominated external commercial borrowing (INR ECB) bonds to be issued by the entities in the restricted group of companies.
The entities will use proceeds of INR ECB bonds primarily to refinance existing indebtedness and to repay or extend inter-corporate loans to the parent along with general corporate purposes.
Fitch said the rating on proposed US dollar notes reflects the credit quality of a portfolio of eight projects across three states in India, comprising of 273 MW of solar assets (54 per cent of total capacity) and 231.5 MW of wind assets (46 per cent).
The rating is also supported by 46 per cent of its total capacity contracted with a sovereign-owned entity, Solar Energy Corporation of India (SECI), which makes timely payments and helps offset the long payment cycle of weaker state-owned distribution companies.
The rating also considers the refinancing risk arising from the partially amortising structure of the notes. The financial profile is assessed by a debt service coverage ratio (DSCR) over the refinancing period, assuming the outstanding principal of the notes will be refinanced upon maturity by long-term amortising debt.
The DSCR averages 1.31x under Fitch's rating case which incorporates reduced energy production, higher expenses and refinancing at a higher interest rate.
"We consider the revenue from SECI as fully contracted revenue and apply the fully contracted project threshold. The credit quality of SECI does not constrain rating as we treat revenue exposure to SECI as systemic risk of the sector," said Fitch.
