Morgan Stanley backed RE firm Continuum to refinance $400 mn bonds

Continuum Inexperienced Power, an Indian renewable power agency backed by Morgan Stanley Infrastructure Companions, plans to refinance its $400 million floating fee bonds with a three-year fastened fee paper to ease rate of interest and forex dangers.

Continuum’s curiosity financial savings will probably be minimal regardless of a decrease funding price as a result of proposed issuance of a bigger quantity. The corporate is not going to face rate of interest threat or be uncovered to altering Secured In a single day Financing Charges, in keeping with score company Normal and Poor’s (S&P).

S&P International Scores on Monday assigned its ‘B+’ long-term issuer credit standing to Continuum. It additionally assigned ‘B+’ long-term concern score to the senior secured notes that Continuum Power Aura Pte. Ltd., of Continuum Inexperienced Power is the father or mother, proposes to concern.

Continuum could have decrease forex threat owing to much less aggressive hedging for the proposed bonds. The corporate intends to hedge its cross-currency publicity for the complete tenor of the proposed notes, as a substitute of its present strategy of hedging for a interval shorter than the complete tenor. Continuum will hedge by a call-spread choice construction, just like most India-based renewable friends.

The corporate advantages from its differentiated positioning within the much less crowded and extra worthwhile industrial and industrial (C&I) power market and it has sooner receivable assortment than friends, mentioned S&P. Nonetheless, smaller scale with restricted venture range and excessive leverage restrict Continuum’s credit score profile.

With 5 initiatives being added, Continuum’s whole working capability will improve to 2.3 gigawatts from 1.3 Gw. The corporate doesn’t intend to develop aggressively past its goal capability of two.3 GW by the tip of fiscal 2024.

The execution threat on initiatives underneath building has dropped, provided that they’re on monitor for commissioning over September-December 2023. Pipeline initiatives will begin contributing full-year money circulation in fiscal 2025, supporting larger earnings and stronger ratios.

Continuum has accomplished main work on the commissioning of substations and transmission strains. The initiatives are within the remaining phases of commissioning, pending the completion of set up of wind generators and photo voltaic panels.

The corporate’s capital expenditure (capex) will peak in fiscal 2024 to about $541 million resulting from deliberate capability additions, mentioned S&P. Capex is essentially debt-funded, and the corporate has secured satisfactory funding from the home market. The whole adjusted debt is estimated to extend to $1.4-1.5 billion over monetary years 2024-2025, from $1 billion in Monetary Yr 2023.

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