Fitch assigns BBB rating to Adani International Container

Mumbai: Fitch Ratings Thursday said it has assigned Adani International Container Terminal Private Limited's (AICTPL) proposed US-dollar senior secured partially amortising notes due 2031 an expected rating of 'BBB-(EXP)'. The outlook is Negative.

“The final rating is contingent upon the receipt by Fitch of final documents conforming to information already received as well as the final pricing and financial close on the proposed notes,” a statement said.

Adani’s container business “benefits from its strategic position within the primary port of call in north-west India, revenue stability from long-term cargo and high operational efficiency,” Fitch said.

“We regard the volatility of AICTPL's revenue as low due to its affiliation with Mediterranean Shipping Company S.A. (MSC) through its 50% parent, Terminal Investment Limited (TIL); TIL, which is majority owned by MSC, is the world's sixth largest container terminal operator. MSC is able to reduce AICTPL's volume volatility, as this is in its interest as an indirect shareholder and also through its commitment to allow AICTPL to use its facilities when possible and through its vessel sharing alliance with Maersk Line,” it said.

“Furthermore, we believe the strong origin and destination nature of AICTPL's portfolio and the low revenue contribution from transshipment mitigates volume volatility. However, this is balanced against customer concentration risk, a limited operational record, no tail in the transaction and a back-loaded amortisation profile,” it added.

AICTPL experienced higher volume during the peak of the coronavirus pandemic, but volume dropped by about 19% in April 2020 compared with the monthly average of January-March.

Volume subsequently rebounded in July-September to pre-pandemic levels, resulting in AICTPL recording 22% yoy volume growth in the half-year ended September 2020 (1HFY21).

AICTPL also increased its market share at Mundra Port to 45%, from 36% in FY20.

Fitch's rating case projects an average debt service coverage ratio (DSCR) of 2.28x, with a minimum of 0.91x in 2031.