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Fitch Ratings has reaffirmed the BB+ rating for SAEL RG1’s senior secured US dollar notes due 2031, maintaining a Stable Outlook. The affirmation highlights the credit strength of SAEL Limited’s restricted group of solar and waste-to-energy (WTE) assets, which continue to deliver reliable performance, steady cash flows, and environmental relevance.
The rating reflects Fitch’s confidence in SAEL’s ability to manage operational risks, maintain financial discipline, and support India’s clean energy transition.
Key Takeaways from Fitch’s Rating Action
- SAEL RG1’s USD notes due 2031 affirmed at BB+ with a Stable Outlook
- The restricted group includes solar and WTE projects totaling 334 MW in capacity
- Debt repayments structured with mandatory cash sweeps to protect bondholders
- Rating supported by proven technology, affiliated O&M contractor, and limited fuel-supply risk
Project Composition and Operational Strength
SAEL RG1 comprises six co-issuers: SAEL Limited, Sunfree Paschim Renewable Energy Ltd, SAEL Solar Solutions Pvt Ltd, Jasrasar Green Power Energy Pvt Ltd, SAEL Kaithal Renewable Energy Pvt Ltd, and Universal Biomass Energy Pvt Ltd. Together, they operate a diversified renewable energy portfolio:
- 72 percent of the rated capacity is solar-based
- 28 percent consists of WTE projects, which benefit from higher tariffs and base-load operation
- The average operating history across assets is approximately five years
The technologies used are considered proven, with solar modules sourced from Tier-1 suppliers and WTE systems installed by global firms such as Thyssenkrupp AG and Siemens. Operations and maintenance are handled by SAEL Engineering Pvt Ltd under fixed-price contracts, ensuring cost predictability and performance consistency.
Revenue and Volume Risk Assessment
Fitch assigns a midrange rating to SAEL’s revenue risk profile, based on the following factors:
- WTE projects generate higher energy output due to continuous operation
- Although they lack take-or-pay contracts, curtailment risk is minimal
- Their must-run status supports compliance with renewable purchase obligations
- Solar spread forecasts are tighter, but overall volume risk remains manageable
Projects commissioned after FY2020 took up to three years to reach optimal output, though newer assets are expected to ramp up faster due to improved commissioning protocols.
Debt Structure and Cash Flow Protection
The USD notes are structured with mandatory cash sweeps (MCS), which accumulate excess cash during the bond tenor to reduce refinancing pressure. Approximately 46 percent of the total bond value will be repaid during the tenor, lowering the balloon payment risk.
Fitch’s rating case debt-service coverage ratio (DSCR) stands at 1.66x post-refinancing, which aligns with the BB+ rating threshold. However, the rating remains sensitive to the execution of MCS, as failure to implement these sweeps could elevate refinancing risk.
Environmental and Strategic Relevance
SAEL’s WTE projects play a vital role in mitigating agricultural pollution, particularly stubble burning, which contributes to poor air quality in northern India. By converting crop residue into energy, SAEL supports both environmental sustainability and rural economic development.
Earlier this year, SAEL secured $1 billion in funding from global institutions including the US International Development Finance Corporation, Norfund, the Asian Development Bank, and Tata Cleantech Capital. These investments aim to avoid over 2.8 million tons of CO2 emissions and reinforce SAEL’s position as a climate-positive infrastructure developer.
Outlook and Future Considerations
Fitch’s Stable Outlook reflects confidence in SAEL’s operational resilience, sectoral relevance, and financial discipline. However, the rating remains exposed to systemic risks in India’s power sector and the group’s reliance on cash sweep mechanisms.
Looking ahead, SAEL is expected to:
- Expand its renewable energy footprint across India
- Enhance operational efficiencies through digital monitoring and predictive maintenance
- Explore new green financing instruments to support future growth
Conclusion
The affirmation of SAEL RG1’s USD notes at BB+ with a Stable Outlook by Fitch Ratings signals robust fundamentals and a well-structured debt profile. With a diversified portfolio of solar and WTE assets, proven technology, and strong environmental impact, SAEL remains a key player in India’s renewable energy transition.
Sources: Fitch Ratings, I Am Renew, Economic Times
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