Suzlon Shrugs Off Rating Suspension on $1.2 Billion Bank Debt

  • ICRA suspends credit ratings citing lack of information
  • Turbine maker says investment grade by CARE proves turnaround

Indian wind turbine maker Suzlon Energy Ltd. shrugged off a decision by ICRA Ltd. to suspend coverage on 80.18 billion rupees ($1.2 billion) of bank debt, saying that its investment-grade rating by another agency shows it’s adequately capitalized.

“It is dated and immaterial when we have current investment grade rating from CARE,” Suzlon Chief Financial Officer Kirti Vagadia wrote in an e-mail reply to questions. CARE Ratings assigned a BBB- credit rating on long-term bank facilities in October 2015, an investment grade representing a “moderate degree of safety,” according to the Mumbai-based company.

ICRA, the Indian unit of Moody’s Investors Service, said Sept. 29 that it was suspending ratings on long- and short-term bank facilities “in the absence of the requisite information” from Suzlon. The ratings agency had cut Suzlon to D from BB in June 2012 citing payment delays that risked the turbine maker’s ability to service long-term debt.

Suzlon subsequently defaulted on $209 million of dollar-denominated convertible bonds.

Now the Pune-based company, India’s second-biggest wind turbine maker, plans to exit a corporate-debt restructuring program offered by its lenders before March 31. Suzlon has been working under the nation’s debt restructuring rules to repair its finances and it returned to profit for the full year for the first time since 2009.

“The government’s clear thrust on renewables and our constant efforts to bring down the cost of energy has resulted in a favorable business outlook” Vagadia wrote. CARE’s investment grade rating “demonstrates our restored credibility on account of significant deleveraging,” he said.

Indian Prime Minister Narendra Modi’s wants to install 100 gigawatts of solar and 60 gigawatts of wind power across the nation by 2022, an initiative that could cost as much as $200 billion, according to Bloomberg New Energy Finance.

Suzlon, with 9.5 gigawatts of installed wind power in India, posted a 2.6 billion rupee loss in the fiscal first quarter. The company has more than $1.9 billion of outstanding liabilities, according to data compiled by Bloomberg.

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