Fitch publishes ‘A(lka)’ rating on WindForce’s proposed debentures

Fitch Ratings has published the National Long-Term Rating of ‘A(lka)’ on WindForce PLC’s proposed senior unsecured redeemable debentures of up to Rs.4 billion. 
The notes are rated one notch below WindForce’s National Long-Term Rating (A+(lka)/Stable), due to increasing structural subordination from secured debt at operating subsidiaries used to fund its capacity expansion.
WindForce’s rating reflects its growing scale as a prominent renewable power generator in Sri Lanka and several regional markets, improving resource diversity and contractual cash flow from long-term power purchase agreements. 
The rating is constrained by the implied credit quality of the key state-owned offtaker, National System Operator (Pvt.) Limited, a successor company to the Ceylon Electricity Board (A(lka)/Stable), following the latter’s restructuring. Cash flow from the state-owned utility continues to account for over 80 percent of WindForce’s EBIT.
Fitch forecasts WindForce’s EBITDA net leverage to rise in the financial year ending March 2027 (FY27) on high debt-funded capex for new generation plants and to reduce thereafter as the new plants are commissioned, driving the Stable Outlook. 
However, inability to deleverage in FY28, in line with the expectations, could put pressure on the WindForce’s rating.