ICRA assigned rating to Rs 33.95 billion term loans (reduced from Rs 22.32 billion) and Rs 2.50 billion fund-based limits of Petronet LNG (PLL) has been reaffirmed at 'AA+'. Further, the rating assigned to the Rs 50.50 billion non-fund based limits (reduced from Rs 78.85 billion) of PLL has been reaffirmed at 'A1+'.

The rating assigned to Rs 6 billion long-term bonds (Rs 3 billion outstanding and Rs 3 billion yet to be placed) has also been reaffirmed at 'AA+'. ICRA has also reaffirmed the issuer rating assigned to PLL at 'IrAA+'.

Further, the ratings of 'AA+/A1+' have been reaffirmed for Rs 33.05 billion fund-based/non-fund based limits (earlier Rs 16.33 billion proposed limits) of PLL. The outlook on the long-term rating and issuer rating is 'stable'. 

The ratings reflect the strengths arising from strong and financially sound sponsors, the robust contractual structure which effectively addresses critical risks in the existing regasification operations and the new project, and PLL's demonstrated track record in running the regasification operations profitably. The ratings also factor in the favourable demand outlook for natural gas in India and the company's comfortable financial risk profile, characterized by moderate gearing level, adequate debt servicing ability and high financial flexibility.

The ratings also take into account the enhanced visibility to the cash flows considering the recent 6 MMTPA 'use or pay' tolling agreements signed with strong counterparties for Dahej 5 MMTPA Phase III along with earlier long-term 7.5 MMTPA supply purchase agreement (SPA) with RasGas and gas supply purchase agreement (GSPA) with offtakers for existing Dahej terminal on back-to-back basis and 1.44 MMTPA SPA with Exxon Mobil and GSPA with offtakers for Kochi terminal. 

The ratings are however constrained by the extremely low capacity utilisation of Kochi terminal expected over the medium term due to delay in commissioning of Kochi- Mangalore-Bangalore pipeline and the project implementation risks arising from the company's significant capex programme, primarily Dahej Phase III expansion project and supply & offtake risks for Kochi terminal.

Though PLL has tied up LNG for a part of its Kochi terminal capacity on a long term contract basis for 1.44 MMTPA LNG with Exxon Mobil for 20 years, the supply from the same is expected to start only by 2016 and the Kochi terminal will have to depend on spot and short to medium term LNG contracts to achieve moderate capacity utilisation during FY 15 -17.

Shares of the company declined Rs 5.15, or 3.53%, to trade at Rs 140.85. The total volume of shares traded was 40,356 at the BSE (2.11 p.m., Friday).