New Delhi, Apr 3 (UNI) Credit rating agency ICRA has upgraded the outstanding LBBB rating for the Rs 217 crore bond programme of Gujarat State Energy Generation Ltd (GSEG) to LBBB+.
The revised rating indicates moderate credit quality. The rating action reflects the finalisation of the Power Purchase Agreement with the erstwhile Gujarat Electricity Board (GEB), expected support from the Government of Gujarat and GUVNL in servicing the obligations on the rated bonds and the improving trend in cash collections from its sole customer, the erstwhile GEB.
The rating continues to favourably factor the limited demand risks given the energy deficit situation, GSEG's comfortable merit order position amongst the Independent Power Producers in Gujarat, financial flexibility derived from current cash balances on its books and unutilised working capital limits.
ICRA also takes into account the strengths derived from GSEG's ownership structure.
The rating is constrained by the fundamentally weak, though improving, credit quality of GUVNL and certain adverse clauses in the new PPA that has been finalised.
ICRA however draws comfort from the support of the Gujarat Government through unconditional and irrevocable guarantee as per the PPA for meeting GSEG's debt servicing liability subject to a maximum of Rs 70 crore in any one year.
UNI SS SR RS1453