The outlook is stable. AGEL will primarily use the proceeds from the USD notes to on-lend to its direct and indirect subsidiaries for them to fund the development of utility-scale renewable power projects, said the agency.
The stable rating outlook reflects Moody's expectation of AGEL's stable cash flows from long-term PPAs over the next few years and delivery of new projects.
Holders of the USD notes will benefit from security with a first-ranking charge over the amounts distributed from the operating entities and projects to AGEL and first-ranking charge over the senior debt reserve account, senior debt amortisation account, debt service reserve account and senior debt restricted reserve account.
"The Ba3 rating assigned to AGEL's proposed notes reflects the company's predictable cash flow backed by long-term power purchase agreements (PPAs) that are supported by its large and diversified portfolio of solar and wind generation projects, significant capital spending plans, demonstrated capacity to deliver on growth projects, backed by its experienced management team, and very high financial leverage," Abhishek Tyagi, a Moody's vice president and senior credit Officer was quoted as saying.
AGEL's operating cash flows are stable, given the geographic diversification of its generation fleet reduces its exposure to potential fluctuations in the availability of solar and wind resources, said Moody’s.
Most of AGEL's projects have long-term PPAs with either central government-owned or state government owned utilities, with predefined tariffs for the duration of the contract. As of June 2021, AGEL's PPAs for operating projects had an average remaining life of around 20 years, which provides visibility over the company's long-term cash flow.
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