The ratings on the notes are not linked to APGL's credit quality, although APGL has guaranteed the notes.
We expect APGL's strong abilities in development and maintenance of solar projects to continue to support stable operations of the assets in the restricted group.
While we expect the restricted group's free cash flows (FCF) to turn positive in FY19 in the absence of asset additions, FCF is likely to be negative thereafter as APGL plans to add assets to the restricted group.
Further we believe APGL's association with strong equity investors like Caisse de depot et placement du Quebec (CDPQ; 32.5% stake) and International Finance Corporation (30.2% stake), limits refinancing risks by improving access to funding in the banking and capital markets.
The APGL restricted group's reasonable scale, well-diversified portfolio of solar assets and better counterparty credit profile results in its business profile being better than its peers such as Neerg Energy Ltd (notes rated B+) and Greenko Investment Company (GIL, notes rated BB- on account of guarantee from parent Greenko Energy Holdings (BB-/ Stable), standalone assessed at B+).
The credit profile of the APGL restricted group is a notch below Melton Renewable Energy UK PLC (MRE UK, BB/Stable) given MRE UK's stronger financial profile, expectations of positive free cash flow generation, and favourable UK regulations relating to the renewables obligation scheme despite the price risk on the renewables obligation and the more stable solar business of APEL.