Moody’s Investors Service on Friday assigned a Baa3 rating to the proposed senior unsecured bonds of Adani Ports and Special Economic Zone (APSEZ).
The issuer rating and the rating of APSEZ’s existing senior unsecured bonds remain unchanged at Baa3. The outlook on the ratings is stable, Moody’s said in a statement.
APSEZ will apply the proceeds of the dollar bond issuance to capital expenditure, refinancing part of existing indebtedness and other permissible uses under the external commercial borrowings guidelines.
The bonds will represent a senior unsecured obligation and will rank equally with all of APSEZ’s existing and future unsecured and unsubordinated indebtedness.
Moody’s said APSEZ’s Baa3 issuer rating primarily reflects the company’s strong market position as the largest port developer and operator in India by cargo volume and the strength of its landmark Mundra Port concession in Gujarat.
The Baa3 issuer rating is also predicated on the company continuing to execute its various projects within time and cost budgets while adhering to regulatory approval processes to minimise the risk of future difficulties.
Moody’s expects that APSEZ’s performance will be driven by the ramp-up of capacity relating to its recently commissioned ports and terminals, and a further increase of the share of containers, with the addition of new terminals to its portfolio.
Moody’s said it will unlikely upgrade the ratings in the near term, given the company’s business profile and financial strategy. Nevertheless, it could upgrade the ratings over the long term if APSEZ continues to improve its operating performance and business mix.
APSEZ operates 10 port concessions around the country at varying stages of development. It is the largest port developer and operator in India when measured by volume with coal and other dry bulk terminals showing an annual capacity of 378 million tonnes.