Ratings giant Moody's Investors Service has cut its bond rating for CDPQ-backed Azure Power to 'Ba3' from 'Ba2', a day after Fitch Ratings downgraded the power producer's bond rating.
Both rating agencies have cited governance issues as the reason for the rating downgrade.
“The performance of APSEP has been below Moody's expectations for the last two-three years mainly driven by lower generation of the solar projects,” Moody’s said, explaining the rationale behind the downgrade.
Apart from CDPQ, the New Delhi-based power producer, which is listed on the New York Stock Exchange, counts World Bank’s International Finance Corporation, Helion Venture Partners, German development finance institution DEG and France’s Proparco among its investors. It was founded by Inderpreet Wadhwa in 2008.
Azure Power Global Limited (APGL), the parent of the two companies, missed its deadline of August 2022 in filing its audited financial statements for its financial year ended March 2022 with the US Securities and Exchange Commission .
“Continued operating underperformance together with governance headwinds would likely put further pressure on the Ba2 ratings of APSEP,” Moody's further said in a statement. APE and APSEP, along with its subsidiaries, represent around 43% AGPL operational capacity.
Moody’s further changed the outlook on the ratings to negative from ratings under review, reflecting the uncertainty in the timeline for regulatory financial disclosures.
“Given the negative outlooks, an upgrade of APE's and APSEP's ratings is unlikely in the near term,” Moody’s said.
It, however, added that it could change the outlook to stable if the companies adequately address audit findings and if corrective actions to address whistleblower complaints do not adversely impact the companies' operational and financial profiles.
