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Moody’s Investors Service has assigned a Ba3 rating to the proposed 7.25-year USD senior secured notes of up to USD620 million to be issued by a newly formed restricted group (RG5) of ReNew Power Private Limited (RPPL, Ba2 stable, Corporate Family Rating). ReNew Wind Energy (AP 2) Private Limited is part of the restricted group.
The rating outlook is stable.
Formed specifically to facilitate the proposed USD notes, the restricted group comprises 10 wholly owned restricted subsidiaries of RPPL. Each entity will be liable as an issuer and guarantor for the USD notes.
The 10 restricted subsidiaries are (1) ReNew Wind Energy (AP 2) Private Limited, (2) Ostro Jaisalmer Private Limited, (3) Ostro Urja Wind Private Limited, (4) Ostro Madhya Wind Private Limited, (5) Badoni Power Private Limited, (6) AVP Powerinfra Private Limited, (7) Prathamesh Solarfarms Limited, (8) Ostro Anantapur Private Limited, (9) Ostro Mahawind Power Private Limited and (10) ReNew Wind Energy Delhi Private Limited.
The proceeds from the USD notes will be used to repay the outstanding external debt issued by the restricted subsidiaries. Post issuance, RG5 may enter into an additional debt facility to refinance any remaining external debt, and to upstream cash to RPPL.
RG5’s exposure to currency risk arising from its USD debt servicing obligations will be mitigated by a combination of coupon swaps and call spread options covering the principal repayments at maturity, as well as by the parent guarantee from RPPL.
The Ba3 rating is predicated on the completion of the transaction on terms consistent with draft documents reviewed by Moody’s, including the hedging arrangement.
“The Ba3 rating on the proposed notes reflects the underlying credit quality of RG5, as well as the parent guarantee provided by RPPL over RG5’s payment obligations for the USD notes,” says Spencer Ng, a Moody’s Vice President and Senior Analyst.
Over 96% of the restricted group’s capacity is contracted under long-term PPAs that span at least another 19 years, underpinning RG5’s cash flow predictability. The balance of the restricted group’s capacity — a 28 megawatt (MW) project contracted with Maharashtra State Electricity Distribution Company Limited — will expire in 2026.
With the exception of a 300MW wind project (~37% of RG capacity) contracted with Solar Energy Corporation of India Limited, the remaining projects have been operational for at least three years. The SECI project was gradually commissioned between October 2020 and March 2021. Moody’s considers RG5’s ramp up risk as manageable, given RPPL’s experience and track record in successfully commissioning wind projects in India.