The rating agency Moody's Investors Services has placed Tata Power’s Ba3 corporate family rating, B1 senior unsecured bond rating and Senior Unsecured MTN Programme (foreign currency) rating of (P) B1 on review for downgrade. The ‘Ba3’ rating indicates higher credit risk.
The rating action reflects material covenant breaches on bank debt associated with 4,000 MW Mundra UMPP and questions relating to the project's long-term impact on its financial profile, absence of changes to tariff structures. The Mundra project is being executed by Coastal Gujarat Private (CGPL), a wholly-owned subsidiary of Tata Power.
Further, to provide protection to CGPL and support its cash flows, Tata Power has already proposed to transfer atleast 75 per cent of its equity interest in the Indonesian coal mines and also continues to evaluate other alternative options.
