ECONOMYNEXT – Fitch Rankings has given Sri Lanka vitality agency WindForce’s proposed senior unsecured redeemable debentures of as much as 4 billion rupees a Nationwide Lengthy-Time period Score of A(lka).
“WindForce’s score displays its rising scale as a distinguished renewable energy generator in Sri Lanka and a number of other regional markets, enhancing useful resource variety and contractual money move from long-term energy buy agreements (PPAs),” the worldwide rankings company stated.
The score is constrained by the implied credit score high quality of the important thing state-owned offtaker, Nationwide System Operator, a successor firm to Ceylon Electrical energy Board following the latter’s restructuring, Fitch identified, including that money move from NSO continues to account for over 80 p.c of WindForce’s EBIT.
The Fitch assertion is reproduced under:
Fitch Publishes ‘A(lka)’ Score on WindForce’s Proposed Debentures
Fitch Rankings – Colombo: Fitch Rankings has revealed the Nationwide Lengthy-Time period Score of ‘A(lka)’ on WindForce PLC’s proposed senior unsecured redeemable debentures of as much as LKR4 billion. The notes are rated one notch under WindForce’s Nationwide Lengthy-Time period Score (A+(lka)/Steady) resulting from growing structural subordination from secured debt at working subsidiaries used to fund its capability growth.
WindForce’s score displays its rising scale as a distinguished renewable energy generator in Sri Lanka and a number of other regional markets, enhancing useful resource variety and contractual money move from long-term energy buy agreements (PPAs). The score is constrained by the implied credit score high quality of the important thing state-owned offtaker, Nationwide System Operator (Pvt) Restricted (NSO), a successor firm to Ceylon Electrical energy Board (CEB, A(lka)/Steady) following the latter’s restructuring. Money move from the state-owned utility continues to account for over 80% of WindForce’s EBIT.
Fitch forecasts WindForce’s EBITDA internet leverage to rise within the monetary 12 months ending March 2027 (FY27) on excessive debt-funded capex for brand spanking new technology vegetation and to cut back thereafter as the brand new vegetation are commissioned, driving the Steady Outlook. Nevertheless, lack of ability to de-leverage in FY28 consistent with our expectations might put strain on WindForce’s score.
Key Score Drivers
Briefly Excessive Leverage on Capex: WindForce expects capex of over LKR40 billion for photo voltaic and wind energy vegetation within the subsequent two years, after most investments have been shifted to FY27 resulting from extended provider negotiations. This may drive EBITDA internet leverage to peak at 9.0x in FY27, above our earlier forecasts. We have now factored in a six-month delay in commissioning, with money move due solely in FY28, when leverage ought to fall to five.0x. The outflows are primarily for a 100MW photo voltaic plant with built-in battery storage and a 130MW battery vitality storage system throughout 13 places across the nation.
Execution dangers for the initiatives are low, supported by the corporate’s file in comparable initiatives, expertise with joint-venture companions, and the restricted building complexity of photo voltaic and wind energy vegetation. The requisite regulatory approvals and offtake agreements are in place, and evacuation infrastructure is accomplished or right-of-way established. The vegetation’ long-term PPAs with NSO are in place at preset tariffs, mitigating worth danger, whereas precedence dispatch for renewable-energy mills ensures demand safety.
Counterparty Constrains Score: WindForce’s score is constrained by the implied credit score high quality of the important thing state-owned offtaker, NSO, which will depend on help by the Sri Lankan sovereign (Lengthy-Time period Native-Foreign money Issuer Default Score (IDR): CCC+; Lengthy-Time period International-Foreign money IDR: CCC+).
WindForce derived round 70% of its EBIT from the earlier state-owned offtaker, CEB, in FY23-FY25, with the share rising to round 80% in FY25 after it commissioned the Kebithigollawa photo voltaic challenge. We anticipate WindForce’s money move publicity to NSO to extend in FY26-FY29 as soon as it commissions new initiatives within the pipeline.
Dangers to Price-Reflective Tariffs: Fitch sees dangers to the state utility’s implementation of cost-reflective tariffs, which might weigh on its stability sheet and strain settlements to home energy producers. The federal government has a number of competing priorities of managing inflation, the state utilities’ monetary well being, and the state’s personal funds. CEB’s EBIT turned unfavourable in FY25 resulting from prices rising sooner than accredited tariff will increase. WindForce’s common receivable days stood at round 75 days in December 2025, consistent with seasonal developments, in contrast with the height of round 350 days in FY23.
Regular EBITDA Margin: We have now lowered our margin expectations for FY26-FY27 to round 65%, much like FY25 ranges, rising to round 70% in FY28 with the contribution from new initiatives. WindForce’s PPAs present long-term money move visibility with a weighted-average remaining contract lifetime of over 10 years, though technology volumes might be affected by seasonal and climatic patterns. That is mitigated by its diversified portfolio of wind (74MW), photo voltaic (55MW) and hydro (15MW) on an alternating current-equivalent foundation throughout 23 energy vegetation, excluding associates and joint ventures.
Peer Evaluation
WindForce is rated one notch under home energy producer and engineering, procurement and building contractor Lakdhanavi Restricted (AA-(lka)/Steady). The distinction displays Lakdhanavi’s bigger working scale as a essential base-load energy generator in Sri Lanka, which has afforded it precedence money move receipts from key offtaker CEB even during times of counterparty credit score stress, in addition to its greater geographic and enterprise diversification.
Each Lakdhanavi and WindForce have vital publicity to state-linked counterparties. Nevertheless, Lakdhanavi additionally has operations and upkeep (O&M) providers, manufactures transformers and switchgears, and provides galvanising providers, offering a level of diversification. We additionally imagine the ability offtaker is prone to prioritise funds to Lakdhanavi over Windforce even in conditions the place its personal monetary profile is stretched, as Lakdhanavi offers O&M providers to one in all Sri Lanka’s largest energy vegetation and has invested in a big liquefied pure fuel energy plant, all of that are essential to Sri Lanka’s energy technology and the state’s future technique.
Resus Power PLC (A-(lka)/Steady), a home energy producer, is rated two notches under WindForce. Resus additionally advantages from contractual income visibility by way of its PPAs with the state-owned offtaker. Nevertheless, Resus’ decrease score displays its tighter liquidity than WindForce and smaller working scale with narrower entry to home banks.
Vidullanka PLC (A+(lka)/Steady) is rated on the identical stage as WindForce. WindForce has bigger working capability than Vidullanka and extra diversified energy technology sources. That is counterbalanced by Vidullanka’s publicity to the state-owned utility of Uganda (B/Steady) and focus in hydropower technology. Most of Vidullanka’s money move stems from abroad, whereas most of its debt is onshore with Sri Lankan banks, exposing the corporate to potential repatriation dangers. Nevertheless, Vidullanka’s monitor file of abroad receipts has been regular.
Fitch’s Key Score-Case Assumptions
– Income development averaging 4% in FY26-FY27, growing to round 60% in FY28 as new initiatives are commissioned
– EBITDA margin of round 65% in FY26-FY27, growing to round 70% in FY28 with the contribution from new initiatives
– Receivable days regular at round 40
– Capex of round LKR2 billion in FY26 and round LKR40 billion in FY27
– Dividend payout of 80% of prior-year revenue.
RATING SENSITIVITIES
Components that May, Individually or Collectively, Result in Damaging Score Motion/Downgrade
– EBITDA internet leverage above 5.0x for a sustained interval;
– EBITDA curiosity protection under 1.5x for a sustained interval.
Components that May, Individually or Collectively, Result in Optimistic Score Motion/Improve
– A sustained and substantial discount within the implied credit score danger of the important thing offtaker.
Liquidity and Debt Construction
WindForce’s liquidity is topic to well timed assortment of dues from NSO. The corporate reported LKR1.6 billion of available money as of 31 December 2025 and had entry to round LKR7 billion in unutilised, albeit uncommitted, credit score strains from native banks towards LKR3.0 billion of debt maturing within the subsequent 12 months. Maturing debt primarily contains the present portion of long-term debt obtained to fund investments in its energy vegetation.
We anticipate the corporate to generate unfavourable free money move within the near-to-medium time period resulting from excessive capex. Nevertheless, WindForce has ample entry to home banks, as most banks are prepared to offer longer-tenured amenities for the corporate’s working energy vegetation which have greater than 10 years remaining below their PPAs. (Colombo/Apr17/2026)
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