Singapore, March 02, 2021 -- Moody's Investors Service has assigned a Ba1 rating to the proposed backed
senior unsecured USD notes of Greenko Dutch B.V. (GDBV),
the proceeds of which will be used for refinancing. The outlook
is stable.
The proposed notes are unconditionally and irrevocably guaranteed by GDBV's
ultimate holding company, Greenko Energy Holdings (GEH), which
has a corporate family rating (CFR) of Ba1.
GEH's obligations under the guarantee will rank at least pari passu with
all of its other present and future unsubordinated and unsecured obligations.
Moody's view of GEH's unsecured obligations does not factor in any
notching for structural subordination because GEH is owned and controlled
by stronger entities and benefits from its shareholders' likely support
in a distress scenario.
As such, the rating for the notes to be issued by GDBV is in line
with GEH's CFR.
RATINGS RATIONALE
GEH's Ba1 CFR combines (1) its standalone credit quality, which
is equivalent to a Ba3 level; and (2) Moody's assessment that there
is a strong likelihood that the company will receive support from its
shareholders, when needed, which results in a CFR that is
two notches above its standalone credit profile.
GEH's standalone credit quality reflects its diverse portfolio of operating
renewable energy assets backed by long-term contracts, track
record and large operating scale. However, GEH's exposure
to financially weak offtakers and large capital spending plans,
which will keep its financial leverage high, offset these strengths.
The two-notch uplift for likely shareholder support reflects the
very strong credit quality of, and strategic oversight by,
the majority shareholder, GIC Private Limited (GIC), a sovereign
wealth fund of the Government of Singapore (Aaa stable). Moody's
expects GIC to provide support to the Greenko group in case of need,
in recognition of the unique importance of its investment in GEH.
The control exercised by the majority shareholder, with a very strong
credit profile, enhances the credit quality of GEH.
Portfolio diversification helps mitigate the risk of exposure to seasonal
variations in the availability of renewable resources and strengthens
GEH's expertise in an economy moving toward increased decarbonization.
GEH has grown its operational renewable energy portfolio to 4.2
gigawatts (GW) as of December 2020 from 1.9 GW as of 31 March 2017.
The GEH portfolio is also diverse, with operating assets across
wind, solar, hydro and biomass technologies in 14 states in
India.
The Ba1 rating also takes into consideration GEH's plan to manage
the leverage in its balance sheet, mainly through equity issuances
over the next 12-18 months. The implementation of such a
plan will contain downside risk but the currently limited rating headroom
will remain while GEH is executing on its sizeable capital spending plan.
Moody's projects that GEH will maintain funds from operations (FFO)
interest coverage of 1.0x-1.5x and FFO/debt of 2%-5%
over the next 12-24 months.
GDBV is a special purpose vehicle that will use the proceeds from the
USD notes for the repayment of the existing notes due in 2022 and 2024.
The existing notes were used to subscribe to senior secured INR debt issued
by each of the other restricted subsidiaries in the restricted group (RG2021),
which are wholly-owned/majority-owned by GEH. GDBV
is also part of RG2021. RG2021 is the same as the current restricted
group underpinning the notes to be refinanced.
The stable rating outlook reflects Moody's expectation that GEH's credit
quality will remain broadly stable, underpinned by steady cash flow
from long-term power purchase agreements (PPAs) and continued support
from shareholders. The stable outlook also recognizes GEH's ability
to manage ongoing execution risks.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Upward rating momentum is unlikely over the next 12-18 months based
on GEH's business profile and financial strategy, and the credit
quality of the offtakers.
The rating could come under downward pressure if (1) GEH's credit
profile deteriorates on a sustained basis, potentially because of
weaker operational performance, a delay in the commissioning of
new projects or further aggressive acquisitions; (2) there is a material
weakening of offtakers' credit quality, which could manifest
itself through a substantial increase in receivables; and/or (3)
support from GEH's shareholders weakens, as reflected by a
meaningful decrease in GIC ownership or an increase in debt leverage without
new equity capital.
Financial metrics that could lead to a rating downgrade include FFO/debt
declining below 3.5% on a consistent basis.
The principal methodology used in this rating was Unregulated Utilities
and Unregulated Power Companies published in May 2017 and available at
https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1066389.
Alternatively, please see the Rating Methodologies page on www.moodys.com
for a copy of this methodology.
Greenko Energy Holdings (GEH), a Mauritius-based company
focused on renewable energy generation in India, is a major energy
company that owns and operates a diversified portfolio of hydro,
wind, solar and biomass power plants. As of December 2020,
GEH's total consolidated capacity was 4,224 MW, including
2,299 MW of wind, 489 MW of hydro, 1,358 MW of
solar and 78 MW of biomass.
GEH has two indirectly wholly owned subsidiaries, Greenko Dutch
B.V. (GDBV, Ba1 stable) and Greenko Solar (Mauritius)
Limited (GSML, Ba1 stable), which are restricted subsidiaries
that are part of RG2021 and NRG2019, respectively. GEH also
has a wholly and directly owned subsidiary, Greenko Mauritius (GM,
Ba1 stable).
The backed senior unsecured ratings of GDBV, GSML and GM are underpinned
by the credit profile of their parent and guarantor, GEH.
GEH's obligations under the unconditional and irrevocable guarantees will
rank at least pari passu with all of its other present and future unsubordinated
and unsecured obligations. As such, the ratings of the notes
issued by GDBV, GSML and GM are in line with GEH's CFR.
REGULATORY DISCLOSURES
For 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
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in relation to each rating of a subsequently issued bond or note of the
same series, category/class of debt, security or pursuant
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provides certain regulatory disclosures in relation to the provisional
rating assigned, and in relation to a definitive rating that may
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For any affected securities or rated entities receiving direct credit
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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
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Ray Tay
Senior Vice President
Project & Infrastructure Finance
Moody's Investors Service Singapore Pte. Ltd.
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Terry Fanous
MD-Public Proj & Infstr Fin
Project & Infrastructure Finance
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