Clean Renewable Power’s USD 363 Million Notes Affirmed At BB- By Fitch, Outlook Stable

Fitch Ratings has reaffirmed the BB- rating for Clean Renewable Power (Mauritius) Pte. Ltd.’s USD 363 million senior secured notes due in 2027, maintaining a stable outlook. The rating reflects the credit profile of a restricted group of renewable energy assets owned by Hero Future Energies, spanning solar and wind projects across India. The affirmation underscores the group’s operational stability, diversified off-taker base, and improving receivable collections, despite refinancing risks and exposure to weaker state utilities.

Key Highlights From Fitch’s Rating Action

- USD 363 million senior secured notes affirmed at BB-  
- Outlook remains stable, indicating manageable credit risk under current conditions  
- Notes are backed by a portfolio of eight renewable energy projects across three Indian states  
- Total installed capacity of 505 megawatts, comprising 273 MW of solar and 232 MW of wind assets  
- Off-takers include Solar Energy Corporation of India (SECI), state-owned utilities, and a third-party energy trader  

Portfolio Composition And Operational Strength

1. Hero RG1 Renewable Assets  
   - The restricted group, referred to as Hero RG1, includes eight special purpose vehicles (SPVs)  
   - All projects are operational and supply electricity under long-term power purchase agreements  
   - SECI is contracted to buy 230 MW of capacity, providing payment stability due to its sovereign backing  
   - Exposure to multiple counterparties helps mitigate concentration risk and payment delays  

2. Technology And Maintenance  
   - Fitch considers the deployed technologies proven and reliable, with midrange operational risk  
   - Short-term operations and maintenance contracts are in place, with scope for renewal or replacement  
   - Performance metrics across the portfolio remain within expected thresholds  

3. Financial Structure And Refinancing Risk  
   - The notes follow a partially amortising structure, with refinancing required at maturity  
   - Fitch’s rating case assumes refinancing through long-term amortising debt  
   - Debt service coverage ratio (DSCR) averages 1.27x over the refinancing period, supporting the BB- rating  
   - Proceeds from the USD notes were used to subscribe to rupee-denominated external commercial borrowings issued by the SPVs  

Credit Challenges And Mitigating Factors

- State-owned distribution companies (discoms) have historically shown weak credit profiles and delayed payments  
- Introduction of late payment surcharge rules in 2022 has improved receivable collections from discoms  
- Commercial and industrial customers show stronger payment discipline  
- Fitch applies a higher merchant DSCR threshold to account for counterparty risk and cash flow variability  

Strategic Ownership And ESG Considerations

- Clean Renewable Power is a wholly owned subsidiary of Hero Future Energies Asia Pte. Ltd.  
- Hero Future Energies Private Limited, the operating entity, has 2.2 GW of installed capacity and 5.3 GW under development  
- ESG initiatives include renewable-only generation, grid integration, and sustainability-linked financing  
- The group’s long-term strategy focuses on expanding clean energy capacity across Asia and Africa  

Market Position And Outlook

- The BB- rating places the notes in the speculative grade category, indicating elevated vulnerability to adverse conditions  
- However, the stable outlook reflects sufficient financial flexibility and operational resilience  
- Fitch expects continued improvement in receivable collections and refinancing visibility over the medium term  
- The rating may be upgraded if refinancing risks are addressed and counterparty credit quality improves  

Sources: Fitch Ratings, Economic Times Energy, NDTV Profit, Hero Future Energies Investor Disclosures