Moody's maintains negative outlook on Adani Transmission

Moody's Investors Service on Friday affirmed an investment grade rating of Baa3 with negative outlook on senior secured bonds of Adani Transmission Ltd (ATL).

According to Moody's global rating scale, obligations rated Baa are subject to moderate credit risk. They are considered medium-grade and as such may possess speculative characteristics.

Thus, Baa3 is an investment grade rating and a negative outlook indicates downward pressure on the issuer.

"Moody's Investors Service has affirmed the Baa3 senior secured bond ratings of ATL. The outlook remains negative," a Moody's statement said.

According to the statement, 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) Ltd -- which operate four transmission lines of more than 5,000 circuit kilometers.

The negative outlook on the senior secured bond ratings reflects the likely weakening in ATL's financial metrics as a result of the incremental debt it would require to complete its substantial capital expenditure programme over the next four to five years.

In another statement, Moody's said it has affirmed the Baa3 senior secured bond rating of Adani Electricity Mumbai Ltd (AEML).

The outlook remains negative, it added.

AEML owns and operates an integrated utility business in Mumbai, which is regulated by Maharashtra Economic Regulatory Commission (MERC), the state regulator for the power industry in Maharashtra.

The servicing of the rated USD bond is supported by an obligor group that includes AEML and Power Distribution Service Ltd (PDSL), a majority owned subsidiary of ATL, set up primarily to provide asset management services to AEML.

"The negative outlook continues to reflect the potential for downgrade if India's sovereign rating (Government of India, Baa3 negative) is downgraded, given AEML's domestic focused business," says Spencer Ng, a Moody's Vice President and Senior Analyst.