The ratings agency confirmed the Baa3 senior secured ratings for ATSOL and AEML, also reaffirming AEML’s (P)Baa3 senior secured medium-term note programme.
Moody’s indicated that the outlook upgrade reflects its anticipation that ATSOL and AEML will continue to uphold liquidity and financial metrics favorable to their ratings. The affirmation of ATSOL’s ratings is also attributed to its close credit relationship with parent Adani Energy Solutions Ltd (AESL), which includes guarantees on the bonds and default provisions linked to AESL’s credit profile.
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According to Moody’s, AESL’s diverse portfolio of regulated transmission and distribution assets supports its stable operational performance.
Despite facing significant capital expenditures in the next two years, Moody’s expects AESL to implement timely actions to maintain key credit metrics, with funds from operations to net debt remaining slightly above the 7.5% tolerance threshold.
In a separate note, Moody’s highlighted that Adani Ports and Special Economic Zone Ltd (APSEZ) is projected to retain solid access to liquidity and a credit profile consistent with its Baa3 rating over the coming 12-18 months. The agency pointed out that APSEZ’s robust financial standing is bolstered by the discretionary character of its planned growth capital expenditures and ongoing access to funding.
For AEML, Moody’s noted steady cash flows from its regulated electricity distribution business in Mumbai, along with an improved financial profile following recent deleveraging. The agency anticipates AEML’s cash flow from operations pre-working capital to debt to stay within the 10.5-11.5% range in the next one to two years.
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Moody’s will continue to monitor ongoing US legal proceedings involving senior executives at another Adani group entity, cautioning that any significant negative developments could impact the group’s access to capital and its ability to achieve growth objectives.
An upgrade in the ratings seems unlikely without an improvement in the sovereign rating, Moody’s stated, while a downgrade could occur if there is a sustained decline in credit metrics or adverse outcomes from the legal proceedings that affect liquidity or operations.
