Thu 09/01/2022 06:11 AM
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UPDATE 1: 6:11 a.m. ET 9/1/2022: Azure Power Solar Energy Private Ltd. saw earlier gains on its USD notes wiped out after Fitch Ratings placed its restricted groups, or RGs, on rating watch negative, and with some real money accounts heard to be trimming exposure, according to two buyside sources.

The notes had gained about two to four points earlier in the day, with the $350.1 million 5.65% notes due 2024 issued by Azure Power Solar Energy Pvt. Ltd. indicated at around 70/ 74 while the $414 million 3.575% notes due 2026 issued by Azure Power Energy Ltd. were at 68/ 72 today.

However, at around 5:30 p.m. the 2024s were seen at 66/69 and 66.05/ 67.95, with the 2026s seen at 65/ 68 and 64.55 / 66.95 by two different buyside sources.

Fitch Ratings today, Sept. 1, placed the Azure Power Solar USD bond (Azure RG2) rating of ‘BB’ and Azure Power Energy USD bond rating of ‘BB+’ on rating watch negative, reflecting “the potential impact of Azure Power Global's ongoing review of its internal controls and compliance framework and the recent changes in management, on overall performance of the restricted groups.” Azure Power Global is the holding company of both Azure RG1 and Azure RG2, the announcement notes, adding that the negative watch will be resolved on receipt of appropriate disclosures by the company.

The notes had made their earlier gains on the back of an investor call held overnight, Aug. 31, which Reorg attended.

Board Chairman Alan Rosling, the company CFO and acting CEO attended the call, although representatives from main shareholders Caisse de dépôt et placement du Québec (CDPQ) and Omers Infrastructure did not attend. CDPQ holds 50.9% while Omers Infrastructure holds 19.4% in Azure Power, as reported.

Rosling in his opening remarks directly addressed the fact that given ongoing investigations relating to a whistleblower case, the company could not give a clear timeline for release of its 2022 financial results. He added that the case, involving potential data manipulation, relates to a single plant at a subsidiary. From deduction - company management said it has been in contact with lenders to the project, and bondholders have not been contacted - the complaint appears not to be related to RGs associated with the company’s bonds, according to the sources, and a note from Nomura’s sales and trading desk.

When management was asked if the specific project was in the RG portfolio, they said they are in discussion with specific lenders and working with them to address their concerns. Management did not directly respond, however, when asked about potential covenant breaches on onshore bank loans, asserting only that they have long-term relationships with banks.

Nomura’s note states that on the assumptions that the issue affects a single asset, and the assumed timeframe within which it occurred, the data manipulation could be project cost inflation.

The company amended details in an earlier Aug. 29 press release in relation to its RG2 financial year 2022 plant load factor, or PLF, revising it to 24.1% from 21.4%.

 




Original Story 11:09 p.m. UTC on Aug. 31, 2022

Azure Power USD Notes 2-4 Points Up After Investor Call; Co. Chairman Says Whistleblower Complaint Relates to One Project, Still Unable to Give Firm Deadline for Publication of Annual Results

USD notes of Indian renewable energy company Azure Power Global Ltd. were up around two to four points early today, said three buysiders, after an investor call held Aug. 31 where Chairman Alan Rosling said an anonymous whistleblower complaint from May related to only one of the company’s projects at a subsidiary. Rosling said the company was still unable to give a firm timeline on delivery of its annual results for financial year 2022.

The $350.1 million 5.65% notes due 2024 issued by Azure Power Solar Energy Pvt. Ltd. were indicated at around 70/ 74 while the $414 million notes due 2026 issued by Azure Power Energy Ltd. were at 68/ 72 today.

The notes had previously collapsed around 35 points, with the due 2024s indicated at 51/55 and the 2026s at 50/53, following the company’s Aug. 29 announcement that its CEO had resigned, and the revelation that an internal review initiated after the whistleblower complaint had identified evidence of manipulation of project data and information by certain employees.

The bonds had regained ground ahead of the call on opportunistic, and optimistic buying, and the 2024s were at 64/68 with the 2026s at 62/66 early in the day Asia time on Aug. 31.

–Vivek Varendra, Sarah Yuniarni
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