Greenko Energy was downgraded to Ba2 from Ba1 by Moody’s upon its “high financial leverage due to its substantial capital spending programme”. The rating also reflected uncertainty around the Greenko’s revenue structure and customer mix. Greenko’s substantial capital spending program, mainly for pumped hydro storage projects (PHSPs), is majorly debt-financed. Any additional debt raised for its capital spending during a rising interest rate environment will pressure its “already-weak financial metrics”, Moody’s noted. The rating agency believes that Greenko’s ratio of funds from operations (FFO) to debt to remain at low-single-digits for at least the next three years. The company’s liquidity is said to be weak mainly because of upcoming bond maturities and substantial capital spending over the next 12 months, with cash holdings of $680mn as of September 2022. However, Greenko’s ability to access debt market and good-quality shareholders mitigate the risks. Lucror Analytics said that the downgrade was “surprising and negative”, especially after S&P upgraded them to BB- from B+ in October 2022. Lucror maintained its hold recommendation for Greenko’s notes and added, “yields on the renewable space in India are attractive in our view, and there may be an opportunity to buy in the near future”.

Greenko’s dollar bonds were trading stable – its 5.55% 2025s are trading at 94.47, yielding 8.45%.

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