Moody’s Investors Service has affirmed Baa3 senior secured bond ratings of Adani Transmission Ltd (ATL) but said the outlook remains negative.
The servicing of ATL’s bonds is supported by an obligor group that includes ATL and two of its fully-owned subsidiaries, Maharashtra Eastern Grid Power Transmission Company and Adani Transmission India, which operate four transmission lines of more than 5,000 circuit kilometres.
The negative outlook on senior secured bond ratings reflects likely weakening in ATL’s financial metrics as a result of incremental debt it will require to complete its substantial capital expenditure programme over the next four to five years.
Over the next two to three years, Moody’s expects the group’s consolidated funds from operations (FFO)/net debt to decline to between 5 and 6 per cent, relative to the minimum tolerance level of 7 per cent set for the rating.
The weakening metrics are primarily driven by additional debt requirements for ATL’s substantial capital programme and reduced FFO after factoring in capitalised interest.
After the addition of Warora Kurnool Transmission project in March, ATL’s capital programme now includes 11 projects with a total spending requirement of over Rs 13,000 crore over the next four to five years.