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Rating Action:

Moody's takes rating actions on 10 Indian infrastructure companies following change in sovereign outlook to stable

06 Oct 2021

Singapore, October 06, 2021 -- Moody's Investors Service (Moody's) has today affirmed the ratings and revised the outlooks to stable from negative on the following 10 Indian infrastructure issuers:

1) NTPC Limited (NTPC)

2) National Highways Authority of India (NHAI)

3) Power Grid Corporation of India Limited (Power Grid)

4) Gail (India) Limited (GAIL)

5) Adani Green Energy Restricted Group (RG-2) comprising Wardha Solar (Maharashtra) Private Limited, Kodangal Solar Parks Private Limited and Adani Renewable Energy (Rj) Limited

6) Adani Transmission Limited (Restricted Group) comprising (ATL RG): (1) Raipur-Rajnandgaon-Warora Transmission Ltd (RRWTL), (2) Sipat Transmission Limited (STL), (3) Chhattisgarh-WR Transmission Limited (CWTL), (4) Hadoti Power Transmission Service Limited (HPTSL), (5) Barmer Power Transmission Service Limited (BPTSL), and (6) Thar Power Transmission Service Limited (TPSL)

7) Adani Ports and Special Economic Zone Limited (APSEZ)

8) Adani International Container Terminal Private Ltd (AICTPL)

9) Adani Electricity Mumbai Limited (AEML)

10) Azure Power Solar Energy Private Limited (Azure Power RG-2)

At the same time, Moody's has affirmed the Baseline Credit Assessments (BCAs) of NTPC, Power Grid and GAIL at baa3.

These rating actions follow Moody's decision to affirm India's sovereign rating at Baa3 and change the rating outlook on the sovereign to stable from negative, as announced on 05 October 2021. For full details on India's sovereign rating action, please refer to this announcement:

https://www.moodys.com/research/Moodys-changes-Indias-rating-outlook-to-stable-from-negative-affirms--PR_453291

The above list includes debt-issuing special purpose vehicles. The total number of impacted Indian infrastructure companies stated above excludes the entities listed under Adani Green Energy Restricted Group and Adani Transmission Restricted Group.

Please click on this link https://www.moodys.com/viewresearchdoc.aspx?docid=PBC_ARFTL455752 for the List of Affected Credit Ratings. This list is an integral part of this Press Release and identifies each affected issuer.

RATINGS RATIONALE

Please click on this link https://www.moodys.com/viewresearchdoc.aspx?docid=PBC_ARFTL455752 for the List of Affected Credit Ratings. This list is an integral part of this Press Release and provides, for each of the credit ratings covered, Moody's disclosures on the following items:

Principal Methodologies and Models Used

AFFIRMATION OF RATINGS AND CHANGE IN OUTLOOK FOR FOUR GOVERNMENT-RELATED ISSUERS: NTPC, NHAI, POWER GRID AND GAIL

Under Moody's joint default analysis approach for government-related issuers (GRIs), government support is one of the key considerations in GRIs' ratings. The ratings and BCAs of these four GRIs are sensitive to a change in the rating or outlook of their government owner given their close links with the Government of India.

The affirmation of NTPC's issuer ratings reflects NTPC's strategic importance as the largest power generation company in India, as well as its close operational and financial links with the government. The rating is also supported by a favorable regulatory framework, its solid financial profile for its rating level, payment security mechanism and strong liquidity position.

The affirmation of NHAI's issuer ratings reflects NHAI's strategic importance and status as the government arm implementing the national highway strategy. The rating also reflects its special legal status as a Government of India entity - through the Ministry of Road Transport and Highways (MoRTH).

The affirmation of Power Grid's issuer ratings reflects the company's strong operational and financial links with the government, its strong competitive position in electricity transmission in India, favorable regulatory environment, and its solid financial profile.

The affirmation of GAIL's issuer ratings reflects the company's dominant position in gas transmission business in India, operational and financial links with the government, and very strong financial profile.

The change in outlook for NTPC, NHAI, Power Grid and GAIL to stable follows the change in outlook for the sovereign rating to stable.

AFFIRMATION OF RATINGS AND CHANGE IN OUTLOOK FOR ADANI GREEN ENERGY RESTRICTED GROUP, ADANI TRANSMISSION RESTRICTED GROUP, APSEZ, AICTPL, AEML and AZURE POWER RG-2

The affirmation of Adani Green Energy Restricted Group's ratings reflects the group's predictable revenues from a diversified set of projects in India, operating under long-term power purchase agreements with fixed tariffs and the group's dependence on sovereign-owned entities, such as Solar Energy Corporation of India, for more than 70% of the offtake from its power projects.

The affirmation of Adani Transmission Restricted Group's ratings reflects the group's predictable cash flow that is underpinned by availability-based revenue under long-term transmission service agreements, solid operating track record and the essential nature of its projects as part of the transmission grid.

The affirmation of APSEZ's issuer rating reflects the company's strong market position as the largest port developer and operator in India by cargo volume and its strong financial profile. It also reflects management's commitment to maintaining appropriate financial metrics supportive of its credit profile.

The affirmation of rating on AITCPL's senior secured bonds reflects the company's strategic location and access to a large catchment area that generates strong origin-destination cargo demand. It also reflects the fully amortizing fixed-cost debt structure that helps to improve the credit profile, its strong operating history and its strong and committed shareholders.

The affirmation of AEML's ratings reflects the company's predictable regulated revenue from its integrated utility business in Mumbai, its solid operating track record as well as management's commitment to maintain financial leverage at a level consistent with its rating, with support from its promoter, the Adani Group. Moody's expects AEML's financial metrics to weaken over the next 1-2 years due to its planned capital spending.

The affirmation of the rating on Azure Power Solar Energy's backed senior unsecured bonds considers the group's long-term power purchase agreements with fixed tariffs and Moody's expectation of support from Caisse de depot et placement du Quebec (CDPQ, Aaa stable), the largest shareholder of its parent -- Azure Power Global Limited (APGL), should the need arise.

The change in outlook to stable from negative for the entities above follows the change in outlook of the sovereign to stable.

FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS

Moody's could upgrade the four GRIs' ratings if the sovereign rating is upgraded and there is no material deterioration in the GRIs' BCAs.

Similarly, the ratings on Adani Green Energy Restricted Group could be upgraded if the sovereign rating is upgraded and there is no material deterioration in the group's underlying credit profile.

APSEZ's rating could be upgraded if (1) the sovereign rating is upgraded; (2) the company continues to improve its operating performance and business mix; and (3) it undertakes permanent leverage reduction, with funds from operations (FFO)/debt remaining above 22% on a sustained basis.

AICTPL's rating could be upgraded if the sovereign rating is upgraded and the company can improve its financial profile such that its average debt service coverage ratio (DSCR) exceeds 3.0x.

AEML's ratings could be upgraded if the sovereign rating is upgraded and if its FFO/debt increases to above 15% on a sustained basis.

Adani Transmission Restricted Group's rating could be upgraded if the sovereign rating is upgraded and there is no material deterioration in the group's underlying credit profile.

Moody's could upgrade Azure Power RG-2's ratings if Azure RG-2's funds from operations (FFO)/debt and FFO interest coverage remain above 12% and 2.5x, respectively, on a sustained basis and if APGL's credit quality improves.

Moody's could downgrade the four GRIs if (1) the sovereign rating is downgraded or the government's willingness to support them weakens; and/or (2) the GRIs' BCAs weaken meaningfully, whereby their financial metrics fall short of their respective rating parameters.

Moody's could downgrade the notes issued by Adani Green Energy Restricted Group if (1) the sovereign rating is downgraded, or (2) if the DSCRs deteriorate towards 1.30x on a sustained basis and/or (3) there is change in Moody's view about the off-taker credit profile of Restricted Group assets.

APSEZ's rating could be downgraded if (1) the sovereign rating is downgraded; or (2) cargo volumes decline, resulting in the company's financial metrics deteriorating beyond the parameters of its Baa3 rating category. In particular, Moody's would consider downgrading APSEZ's rating if its FFO/debt falls below 14% on a sustained basis and cash interest coverage is below 2.75x-3.00x. A reinstatement of related-party loans could also strain the rating.

AICTPL's rating could be downgraded if the sovereign rating is downgraded; or (1) if the company's average DSCR declines below 1.73x over the next three to five years or FFO/debt declines below 12% on a sustained forward-looking basis; (2) AICTPL's ability to retain sufficient cash to meet the last three years' debt servicing is severely compromised; and/or (3) support from AICTPL's shareholders weakens to the extent that it affects AICTPL's operations

Moody's could downgrade AEML's ratings if the sovereign rating is downgraded; or if there is (1) a weakening in AEML's financial profile as indicated by its FFO/debt falling below 9% on a consistent basis, or (2) there is evidence of AEML's funds being funneled to support other group entities via related-party transactions, worsening AEML's liquidity or likely future financial profile.

Moody's could downgrade Adani Transmission Restricted Group's ratings if the sovereign rating is downgraded; or if there is (1) a weakening in ATL RG's average DSCR to below 1.35x on a consistent basis, or (2) there are signs of a decline in the essentiality of the RG's lines as part of the transmission grid.

Moody's could downgrade Azure Power RG-2's ratings if the sovereign rating is downgraded or (1) the credit quality of its parent Azure Power Global Limited (APGL) deteriorates; (2) its FFO/debt falls towards 6% on a sustained basis; (3) support from APGL's shareholders weakens, as reflected by a meaningful decrease in CDPQ's ownership and/or (4) there is change in Moody's view about the off-taker credit profile of RG-2.

REGULATORY DISCLOSURES

The List of Affected Credit Ratings announced here are all solicited credit ratings. Additionally, the List of Affected Credit Ratings includes additional disclosures that vary with regard to some of the ratings. Please click on this link https://www.moodys.com/viewresearchdoc.aspx?docid=PBC_ARFTL455752 for the List of Affected Credit Ratings. This list is an integral part of this Press Release and provides, for each of the credit ratings covered, Moody's disclosures on the following items:

• Rating Solicitation

• Issuer Participation

• Participation: Access to Management

• Participation: Access to Internal Documents

• Disclosure to Rated Entity

• Endorsement

• Lead Analyst

• Releasing Office

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 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.

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 http://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1288435.

The below contact information is provided for information purposes only. Please see the ratings tab of the issuer page at www.moodys.com, for each of the ratings covered, Moody's disclosures on the lead rating analyst and the Moody's legal entity that has issued the ratings.

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
VP - Senior Credit Officer
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

Ian Lewis
Associate Managing Director
Project & Infrastructure Finance
JOURNALISTS: 852 3758 1350
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

No Related Data.
© 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.

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