Adani Green's Two Bonds Get 'Overweight' Upgrade From JPMorgan

Two restricted group bonds of Adani Green Energy Ltd. received an 'overweight' upgrade from JPMorgan, as the US-based investment banker sees "green shoots", according to a note issued on Wednesday.

The rating has been raised for Adani Renewable Energy RJ Ltd. bond maturing in 2039; and Adani Green Energy bond maturing in 2042. Before this upgrade, the two bonds were rated as neutral.

In the Indian renewables space, JPMorgan finds the two bonds "overall attractive", with preference for ADGREG, which trades about "30bps off ARENRJ", the note stated.

"Fundamentally, we consider Adani Green's two RG bonds to have the best operating and financial metrics among the renewable energy bonds," it said.

JPMorgan said its views are comforted due to the two bonds being in a "ring-fenced structure outside of the other Adani Green entities", and the fact that there is 50% shareholding in these projects by Total Energies. Also, the long tenor due to amortisation is "in fact the right structure for Indian renewable energy RG bonds", it added.

In its note, JPMorgan highlighted some of the recent positive developments for Adani Green, including the refinancing of its $1.06-billion, or Rs 9,261-crore construction facility which was due in March 2025.

The construction facility was taken in 2021 to develop hybrid solar-wind projects in the state of Rajasthan. As per the disclosure, the new facility has a door-to-door tenor of 19 years with fully amortising debt structure, JPMorgan pointed out.

State-run Power Finance Corp. is likely the main lender for this refinancing, news agency Bloomberg reported earlier this month.

The new facility is also rated AA+/stable by three domestic rating agencies, JPMorgan said. "Pricing for the new facility is reported at ~8.9%, which signifies continued access to domestic lenders for Adani Group and Adani Green in particular, especially for secured and project level debt."

The note also highlighted Crisil Ratings' revised outlook for the long-term bank facilities and non-convertible debentures of Adani Green Restricted Group 1. The ratings agency, last month, upgraded its outlook from 'stable' to 'positive' and reaffirmed the rating at ‘Crisil AA+’.

Adani Green Restricted Group 1 had better than P90 plant load factor—conservative estimate of energy production—in calendar year 2024, leading to expectations of continued better performance and debt servicing cushions going forward, Crisil had said in a note issued on Feb. 5.

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