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Moody's Upgrades Adani Ports Outlook to Stable, Affirms Key Units' Ratings

Moody's Ratings has revised the outlook for Adani Ports and Special Economic Zone (APSEZ) to stable from negative while reaffirming its investment grade Baa3 rating. The agency also affirmed the Baa3 ratings for Adani Transmission Step-One Limited (ATSOL) and Adani Electricity Mumbai Limited (AEML). The upgrade reflects Moody's expectation that these entities will maintain solid access to liquidity and a credit profile supportive of their ratings over the next 12-18 months. The ratings affirmation for AEML is based on predictable revenue from its regulated utility business in Mumbai.

Key Points: Moody's Revises Adani Ports Outlook to Stable, Affirms Ratings

  • Outlook for Adani Ports revised to stable
  • Baa3 ratings affirmed for APSEZ, ATSOL, AEML
  • Strong liquidity and credit profile cited
  • Capital spending flexibility supports ratings
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Moody's Ratings upgrades outlook on Adani Ports, ATSOL and AEML; reaffirms ratings

Moody's upgrades Adani Ports outlook to stable, reaffirms Baa3 ratings for APSEZ, ATSOL, and AEML, citing strong liquidity and credit profiles.

Moody's Ratings upgrades outlook on Adani Ports, ATSOL and AEML; reaffirms ratings
"APSEZ's robust financial profile is supported by the discretionary nature of its planned capital spending for growth and funding access. - Moody's Ratings"

Ahmedabad, Jan 15

Moody's Ratings on Thursday revised the outlook on Adani Ports and Special Economic Zone's ratings to stable from negative, along with reaffirming 'Baa3' investment grade rating -- reflecting confidence in APSEZ's creditworthiness and long-term financial prospects.

Moody's Ratings also affirmed Baa3 senior secured ratings of Adani Transmission Step-One Limited (ATSOL) and Adani Electricity Mumbai Limited (AEML), along with affirming the '(P)Baa3 senior secured MTN programme ratings' for Adani Electricity Mumbai Limited (AEML), India's No 1 integrated power utility company.

The global brokerage noted that APSEZ would maintain solid access to liquidity and a credit profile in line with its Baa3 rating over the next 12-18 months.

"APSEZ's robust financial profile is supported by the discretionary nature of its planned capital spending for growth and funding access," it added.

The global brokerage said that it has changed the outlook on all ratings to stable from negative.

"The outlook change to stable reflects our expectation that ATSOL and AEML would maintain access to liquidity and a credit profile supportive of their investment grade ratings over the next 12-18 months," it said in its note.

Explaining the rationale behind the ratings upgrade, the brokerage said that the affirmation of ATSOL's senior secured bond ratings reflects the company's close credit links with its wholly owned parent Adani Energy Solutions Limited (AESL) because of AESL's guarantee on the rated bonds and the event of default provisions linked to AESL's insolvency.

"AESL's credit profile, in turn, reflects its diversified portfolio of quality transmission and distribution assets, which benefit from supportive regulatory regimes or long-term contracts with fixed tariffs," it noted.

"Over the next one to two years, we expect AESL's funds from operations (FFO)/net debt to remain marginally above the minimum tolerance level of 7.5 per cent, given the incremental debt required to fund its sizable capital spending. The trajectory of AESL's metrics will also be driven by the actual timing of capital spending and the associated debt incurrence," said Moody's Ratings.

The brokerage further said that the affirmation of AEML's senior secured bond ratings reflects the predictable revenue from its regulated utility business in Mumbai.

"We expect AEML to be able to deliver cash flow from operations (CFO) pre-working capital/debt metrics of 10.5 per cent to 11.5 per cent over the next one to two years," said the note.

- IANS

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Reader Comments

P
Priya S
Good to see international agencies acknowledging the strong fundamentals of our infrastructure companies. Adani Electricity Mumbai (AEML) has actually improved power reliability in the city. Their predictable revenue model makes sense for a stable rating. 👍
R
Rohit P
While the upgrade is welcome, we must remain cautious. The note itself says metrics are "marginally above" minimum tolerance due to high capital spending. Heavy debt for growth is a double-edged sword. Hope the management prioritizes debt reduction alongside expansion.
S
Sarah B
As someone who follows global markets, this is a significant step. Moving from 'negative' to 'stable' outlook is a clear vote of confidence in the group's financial management and liquidity access post-allegations. It should ease concerns of foreign institutional investors.
V
Vikram M
APSEZ handles a massive portion of India's cargo. Their performance is directly linked to our trade health. This rating reaffirmation is good news for the broader logistics and export sector. Bharat's growth story continues!
K
Karthik V
The detailed rationale about supportive regulatory regimes for transmission assets is key. It shows these aren't speculative businesses but essential utilities with long-term visibility. This stability benefits the end consumer with consistent service.

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