Fitch Assigns Indian Renewable Energy Development Agency's upcoming MTN Programme 'BBB-(EXP)'

Fitch Ratings has assigned Indian Renewable Energy Development Agency's (IREDA; BBB-/F3/Stable) upcoming USD300m MTN programme expected ratings of 'BBB- (EXP)' and a short-term expected rating of 'F3(EXP)'.

The assignment of the final ratings on the programme is contingent upon the receipt of final documents conforming to information already received and details regarding the amount, coupon rate and maturity.

KEY RATING DRIVERS

The programme is rated in line with IREDA's Long-Term Issuer Default Rating (IDR) as issues under the programme will constitute direct, unconditional, unsubordinated and unsecured obligations of the IREDA. The MTN programme will be used for general corporate purposes.

IREDA's ratings are equalised with those of the sovereign (BBB-/F3/Stable) IDR. This reflects the 100% state ownership of the company, the entity's public-sector legal status and the strong operational and strategic ties with the government, resulting in a high likelihood of extraordinary government support if needed. IREDA is therefore classified as a credit-linked entity under Fitch's public-sector entity (PSE) criteria.

IREDA was incorporated under the 1956 Companies Act, and is instrumental for the government's core policy of fostering the renewable energy sector. It remains crucial in light of the country's sizeable projected growth. IREDA is the only public entity devoted to renewable energy funding. It does not have a majority market share, but IREDA is viewed as a benchmark investor for its sector expertise. It is recognised as a "systemically important non-banking financial company" by the Reserve Bank of India, so IREDA complies with specific prudential regulations.

RATING SENSITIVITIES Any rating action on the issuer would be mirrored on the ratings of the programme or issues under the programme.

IREDA's ratings are credit-linked to those of the sovereign, so a positive or negative rating action on the sovereign would result in similar rating action on the issuer. Changes to IREDA's legal status, weakening potential support from the state could lead to a downgrade.

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