S&P affirms rating of Adani Green, removes from under observation on 'fully' secured debt'

Despite the turmoil in Adani Group, S&P Global has affirmed its rating on Adani Green Energy at 'BB+' with a stable outlook.

Also, the American credit rating agency has removed the company from under-criteria observation.

S&P expects the company's restricted group to help meet repayment obligations due to its strong reserving mechanism.

Adani Green's restricted group 2 includes three entities namely Wardha Solar (Maharashtra), Kodangal Solar Park, and Adani Renewable Energy (RJ).

The RG2 are the co-issuers and co-guarantors of Adani Green's $362.5 million in green bonds which has a maturity of 20 years and a weighted average life of 13.47 years.

As per media reports, S&P stated that RG2's debt is fully secured with cash flow waterfalls which prioritise operating expenditure and debt service in times of disruption.

Also, taking into consideration their ring-fenced assets, S&P believes the structure sufficiently protects investors.

S&P believes AGEL RG2 is currently not impacted by the governance risks and funding challenges for the larger Adani Group.

Last year, on December 14, S&P placed Adani Green under criteria observation.

Notably, the revision in the criteria of S&P does not impact the rating agency's assessment of the project's creditworthiness, it said on Friday.

This comes a day after when Fitch Ratings also affirmed Adani Transmission's restricted group's notes at 'BBB-' with a stable outlook.

Adani Transmission's RG1 includes six co-issuers - Barmer Power Transmission Service Limited, Chhattisgarh-WR Transmission, Hadoti Power Transmission Service, Raipur-Rajnandgaon-Warora Transmission, Sipat Transmission Limited, and Thar Power Transmission Service - and one non-issuing SPV, Adani Transmission (Rajasthan) Ltd (ATRL).

In a statement, Fitch also said, ATL RG1's credit assessment is not directly affected by the alleged malpractices at India's Adani group highlighted in Hindenburg Research's report due to the ringfenced nature of these assets.

The offshore bondholders benefit from a robust cash flow waterfall mechanism and covenants that restrict cash upstreaming to shareholders and limit indebtedness.

Moreover, ATL RG1 has a 30-year largely amortizing bond.

On BSE, Adani Green Energy's share price closed at ₹486.75 apiece at a 5% lower circuit. Similarly, Adani Transmission also closed at a 5% lower circuit at ₹711.90 apiece on Friday.