Fitch Ratings has assigned Indian Renewable Energy Development Agency's upcoming $300-million medium term note programme expected ratings of 'BBB- (EXP)' and a short-term expected rating of 'F3(EXP). Proceeds from the MTN programme will be used for general corporate purposes.

'BBB' ratings indicate that expectations of default risk are currently low. The capacity for payment of financial commitments is considered adequate, but adverse business or economic conditions are more likely to impair this capacity.

‘F3’ ratings indicate that the intrinsic capacity for timely payment of financial commitments is adequate.

Fitch said the assignment of the final ratings on the programme is contingent upon the receipt of final documents conforming to information already received and details regarding the amount, coupon rate and maturity.

According to the credit rating agency, IREDA's ratings are equalised with those of the sovereign Issuer Default Rating. This reflects the 100 per cent state ownership of the company, the entity's public-sector legal status and the strong operational and strategic ties with the government, resulting in a high likelihood of extraordinary government support if needed.

IREDA is therefore classified as a credit-linked entity under Fitch's public-sector entity (PSE) criteria.

IREDA is instrumental for the government's core policy of fostering the renewable energy sector. It remains crucial in light of the country's sizeable projected growth. The agency is the only public entity devoted to renewable energy funding.

“It does not have a majority market share, but IREDA is viewed as a benchmark investor for its sector expertise. It is recognised as a "systemically important non-banking financial company" by the Reserve Bank of India, so IREDA complies with specific prudential regulations,” Fitch said.

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