Ahmedabad, Jan 15 (AHN) Moody’s Ratings on Thursday revised the outlook on Adani Ports and Special Economic Zone’s (APSEZ) ratings to stable from negative, along with reaffirming ‘Baa3’ investment grade rating -- reflecting confidence in APSEZ’s creditworthiness and long-term financial prospects.

Moody's Ratings also affirmed Baa3 senior secured ratings of Adani Transmission Step-One Limited (ATSOL) and Adani Electricity Mumbai Limited (AEML), along with affirming the ‘(P)Baa3 senior secured MTN programme ratings’ for Adani Electricity Mumbai Limited (AEML), India's No 1 integrated power utility company.

The global brokerage noted that APSEZ would maintain solid access to liquidity and a credit profile in line with its Baa3 rating over the next 12-18 months.

“APSEZ's robust financial profile is supported by the discretionary nature of its planned capital spending for growth and funding access,” it added.

The global brokerage said that it has changed the outlook on all ratings to stable from negative.

“The outlook change to stable reflects our expectation that ATSOL and AEML would maintain access to liquidity and a credit profile supportive of their investment grade ratings over the next 12-18 months,” it said in its note.

Explaining the rationale behind the ratings upgrade, the brokerage said that the affirmation of ATSOL's senior secured bond ratings reflects the company's close credit links with its wholly owned parent Adani Energy Solutions Limited (AESL) because of AESL's guarantee on the rated bonds and the event of default provisions linked to AESL's insolvency.

“AESL's credit profile, in turn, reflects its diversified portfolio of quality transmission and distribution assets, which benefit from supportive regulatory regimes or long-term contracts with fixed tariffs,” it noted.

“Over the next one to two years, we expect AESL's funds from operations (FFO)/net debt to remain marginally above the minimum tolerance level of 7.5 per cent, given the incremental debt required to fund its sizable capital spending. The trajectory of AESL's metrics will also be driven by the actual timing of capital spending and the associated debt incurrence,” said Moody's Ratings.

The brokerage further said that the affirmation of AEML's senior secured bond ratings reflects the predictable revenue from its regulated utility business in Mumbai.

“We expect AEML to be able to deliver cash flow from operations (CFO) pre-working capital/debt metrics of 10.5 per cent to 11.5 per cent over the next one to two years,” said the note.