Greenko to Prepay Over $1 Billion in Bonds with NABFID Support
POWER & RENEWABLE ENERGY

Greenko to Prepay Over $1 Billion in Bonds with NABFID Support

Renewable energy company Greenko is set to prepay over $1 billion of dollar bonds maturing next year, utilizing funds raised from the government-backed National Bank for Financing Infrastructure and Development (NABFID).

NABFID has sanctioned ?62 billion, which Greenko will use to repay foreign bond investors for bonds maturing in January and July next year. The individuals, requesting anonymity, stated that the buyback process is yet to begin.

Greenko, with 7.5 gigawatts of installed solar and wind power capacity across 15 states in India, operates more than 100 projects, primarily through special purpose vehicles (SPVs).

The loan structure allows NABFID to finance these projects through a co-obligator framework, pooling the projects together for a better AA credit rating locally, compared to an A rating if done independently. Greenko plans to borrow from SPVs to prepay a $500 million bond maturing in January and another $535 million bond maturing in July 2024.

Greenko has regularly tapped the overseas bond market, driven by demand for sustainable projects from large institutional investors abroad. However, with prolonged high US interest rates, the company aims to replace this costly debt with lower-cost rupee debt, aligning with market strategies to reduce high-cost overseas borrowings.

Backed by Singapore?s GIC Holdings Pte Ltd (52%), Abu Dhabi Investment Authority (14%), and Japan?s ORIX Corp (22%), Greenko founders Mahesh Kolli and Anil Kumar Chalamalasetty have ambitious plans for expanding renewable energy projects in India.

Currently, Greenko is constructing a 5.2 GW integrated energy storage project in Andhra Pradesh, with similar projects planned for Karnataka, Maharashtra, and Rajasthan.

Despite these expansions, Greenko faces challenges. In March, global rating agency Fitch revised its outlook on Greenko's long-term Issuer Default Rating (IDR) to negative from stable, while affirming its rating at 'BB'. Fitch forecasts that Greenko's earnings before interest, tax, depreciation, and amortisation (EBITDA) to net interest coverage will breach its negative sensitivity of 1.5 times in the financial year ending March 2025 before returning to the threshold, leaving the company with limited headroom in FY26 due to the proposed acquisition of a 60.08% stake in the 1,200MW Teesta III hydro project, associated restoration works, and new capex on a 1.5GW solar power plant.

Renewable energy company Greenko is set to prepay over $1 billion of dollar bonds maturing next year, utilizing funds raised from the government-backed National Bank for Financing Infrastructure and Development (NABFID). NABFID has sanctioned ?62 billion, which Greenko will use to repay foreign bond investors for bonds maturing in January and July next year. The individuals, requesting anonymity, stated that the buyback process is yet to begin. Greenko, with 7.5 gigawatts of installed solar and wind power capacity across 15 states in India, operates more than 100 projects, primarily through special purpose vehicles (SPVs). The loan structure allows NABFID to finance these projects through a co-obligator framework, pooling the projects together for a better AA credit rating locally, compared to an A rating if done independently. Greenko plans to borrow from SPVs to prepay a $500 million bond maturing in January and another $535 million bond maturing in July 2024. Greenko has regularly tapped the overseas bond market, driven by demand for sustainable projects from large institutional investors abroad. However, with prolonged high US interest rates, the company aims to replace this costly debt with lower-cost rupee debt, aligning with market strategies to reduce high-cost overseas borrowings. Backed by Singapore?s GIC Holdings Pte Ltd (52%), Abu Dhabi Investment Authority (14%), and Japan?s ORIX Corp (22%), Greenko founders Mahesh Kolli and Anil Kumar Chalamalasetty have ambitious plans for expanding renewable energy projects in India. Currently, Greenko is constructing a 5.2 GW integrated energy storage project in Andhra Pradesh, with similar projects planned for Karnataka, Maharashtra, and Rajasthan. Despite these expansions, Greenko faces challenges. In March, global rating agency Fitch revised its outlook on Greenko's long-term Issuer Default Rating (IDR) to negative from stable, while affirming its rating at 'BB'. Fitch forecasts that Greenko's earnings before interest, tax, depreciation, and amortisation (EBITDA) to net interest coverage will breach its negative sensitivity of 1.5 times in the financial year ending March 2025 before returning to the threshold, leaving the company with limited headroom in FY26 due to the proposed acquisition of a 60.08% stake in the 1,200MW Teesta III hydro project, associated restoration works, and new capex on a 1.5GW solar power plant.

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