Hero Future Energies to hit int'l bond market, use funds for India projects

Renewables company will use its Mauritius SPV, subscribe to Indian rupee-denominated external commercial borrowing

Hero Future Energies will tap the international bond market for funds, use its Mauritius SPV to issue USD senior notes. The renewables company will use the proceeds to subscribe to Indian rupee-denominated external commercial borrowing (INR ECB) bonds.

Clean Renewable Power (Mauritius) Pte. Ltd. (CRP) proposes to issue six-year USD senior unsecured notes. CRP is a financing vehicle incorporated in Mauritius and a wholly owned subsidiary of Hero Future Energies (HFE).

Fitch Ratings Agency assigned BB-(Exp) rating to the proposed notes. CRP will use the proceeds to subscribe to Indian rupee-denominated external commercial borrowing (INR ECB) bonds by entities in the restricted group of companies. The entities will use the proceeds of the INR ECB bonds primarily to pay debts, and to repay or extend inter-corporate loans to the parent along with general corporate purposes, Fitch said in a release.

The funds from the bonds would be used to finance projects in India. The project portfolio to be funded comprises of eight projects across three states in India - 273.0MW of solar and 231.5MW of wind assets.

“The rating is supported by 46 per cent of HFE’s total capacity contracted with a sovereign-owned entity, Solar Energy Corporation of India (SECI), which makes timely payments and helps offset the long payment cycle of weaker state-owned distribution companies,” said Fitch.

Moody's Investors Service has assigned a (P)Ba2 rating to the proposed notes by HFE. "The (P)Ba2 rating assigned to the proposed notes reflects the underlying credit quality of the assets, given Clean Renewable Power's reliance on cash flow from the ECB repayments to meet its own debt servicing requirements, and the parent guarantee provided by HFE over the INR payment obligations under the ECBs," said Abhishek Tyagi, a Moody's Vice President and Senior Analyst.

HFE has also been planning to issue fresh equity of about $250 million to fund its renewable energy projects outside India, this paper reported recently. The company is in talks with leading global institutional financers to raise capital and aims to be a $1 billion company.

In December 2019, it raised $65 million from the Asian Infrastructure Investment Bank for this project. In November, Abu Dhabi Future Energy Company (Masdar) invested $150 million in HFE. This was followed by another round of strategic investment by the International Finance Corporation (IFC), which pumped in $90 million in HFE. IFC had earlier invested $125 million in HFE back in 2017.