Fitch Ratings Affirms ‘BB-‘ Rating for Clean Renewable Power’s USD363 Million Notes; Outlook Stable

Fitch Ratings has maintained the credit rating of Clean Renewable Power (Mauritius) Pte. Ltd.’s (CRP) senior secured notes at ‘BB-‘ with a stable outlook. These notes, valued at USD363 million and maturing in 2027, are backed by Hero Future Energies Asia Pte. Ltd., under which CRP operates as a fully-owned subsidiary.

The rating reflects a balanced assessment of the credit risks and strengths linked to CRP’s financial structure and its operational portfolio, Hero RG1. This portfolio includes eight renewable energy projects in India, with a combined capacity of 505 megawatts—273 megawatts from solar and 232 megawatts from wind energy. Most of this energy is sold under long-term power purchase agreements (PPAs) to the Solar Energy Corporation of India (SECI) and various state-owned utilities, providing a stable revenue stream despite the potential delays in payments from some state utilities.

The financial metrics considered by Fitch include a debt service coverage ratio (DSCR), which averages 1.29x under Fitch’s rating scenario. This calculation anticipates the refinancing of the outstanding principal upon maturity with long-term amortising debt.

Operational risks are considered moderate, given the established technology of the wind and solar projects and the fixed-price, short-term operation and maintenance contracts that include annual escalation and performance penalties. Although there is no cost validation from an independent engineer and a lack of maintenance reserves, the availability of numerous operators and contractors in India’s burgeoning renewable sector mitigates potential operational disruptions.

In terms of revenue risk, the projects benefit from long-term, fixed-price PPAs, which insulate them from price volatility. However, a small proportion of the capacity faces future merchant price risks as the PPAs expire within five years.

CRP’s debt structure includes features like a cash trap and mandatory cash sweep, which mitigate refinancing risks. About 27% of the principal is set to be repaid through these mechanisms from the first year, supporting the refinancing of the remaining balance at maturity.

In comparison, CRP is rated on par with India Green Power Holdings (IGPH) but has a more diversified and balanced portfolio in terms of wind and solar capacity. On the other hand, Continuum Energy Levanter Pte. Ltd. (CELP) holds a higher rating due to its stronger debt repayment structure and higher DSCR.

Fitch’s analysis considers potential delays in infrastructure development, such as those affecting the 200MW Gulbarga plant, which is currently operating below capacity due to pending governmental infrastructure enhancements.

This assessment is based on information from Fitch Ratings, including their comprehensive analysis of CRP’s operational performance and financial strategies.