Fitch Ratings has affirmed India-based Adani Transmission Limited's (ATL) Long-Term Foreign-Currency Issuer Default Rating (IDR) at 'BBB-' with a Negative Outlook and Long-Term Local-Currency IDR at 'BBB-' with a Stable Outlook.
The Negative Outlook on the Foreign-Currency IDR reflects the Negative Outlook on India's sovereign rating (BBB-/Negative). The rating is not directly constrained by the sovereign rating, but cannot exceed the Country Ceiling of 'BBB-' to reflect the transfer and convertibility risk associated with foreign-currency obligations. The Country Ceiling may be revised down if the sovereign IDR is downgraded, it said in a statement.
ATL's ratings reflect its business profile, which is supported by a regulated asset base, a payment pooling mechanism for transmission assets, diversified counterparty exposure and established record in executing and operating transmission projects. "We expect ATL's net leverage, measured as net debt/EBITDA, to remain commensurate with the rating over the medium term. Net leverage is likely to increase temporarily above 6.0x, our downgrade trigger, in financial year ending March 2023 (FY23), but should come down well below 6.0x by FY24."
