Moody's upgrades its ratings for Azure Energy and Azure Solar following CDPQ's majority stake investment

NEW DELHI: Credit ratings agency Moody's upgraded Azure Power Energy and Azure Power Solar's ratings to Ba2 and Ba1 respectively, maintaining a "stable" outlook.

The earlier ratings for Energy was Ba3, while for Solar was Ba2. Both are part of Azure Power Global Limited (APGL).

"The upgrade reflects our increased expectation that Caisse de depot et placement du Quebec (CDPQ, Aaa stable), which is now the majority shareholder of APGL, will provide support to Azure Power Energy and Azure Power Solar in case of need," said Abhishek Tyagi, senior analyst and vice president at Moody's.

CDPQ is a Canadian investor, and recently acquired a majority stake of 50.9% in APGL. Since March 2017, CDPQ has more than doubled its stake in the power company.

"The position of CDPQ as a majority shareholder will strengthen APGL's corporate governance and will allow CDPQ to maintain close oversight of the group's strategy and operations," said Moody's.

The difference of Ba1 and Ba2 between Azure Energy and Azure Solar is due to Solar's lower leverage and better structural features of its senior unsecured USD notes, which include cash-traps the reduce refinancing risks, according to the agency.

The additional rating of "stable" indicates that Moody's expects incremental cashflow from APGL's newly commissioned projects under the long-term power purchase agreements (PPAs) for at least the next 12 to 18 months.