Bond Market News

Moody’s has revised the outlook of Adani Group’s North Queensland Export Terminal Pty Ltd (NQXT) while affirming the Ba2 senior secured ratings reflecting the rising refinancing risk associated with NQXT’s $500mn 4.45% 2022s issued under Adani Abbot Point Terminal as creditors increasingly prefer ESG financing over coal investments. According to the rating agency, “The coal mining and coal terminal sectors exhibit very high exposure to environmental and social risks, with risk factors including declining demand for coal over time,” adding, “Increasingly onerous environmental restrictions in Australia are likely to affect the operating regime of coal mines or terminals and hinder mine expansions. The latter could also be restricted by judicial challenges.” NQXT is part of an obligor group under Abbot Point Port Holdings Pte Limited, Singapore that has economic ownership of the Abbot Point Coal Terminal in North Queensland under a 99-year lease with the state-owned lessor, North Queensland Bulk Port Authority. The rating affirmation indicates the favourable operating conditions for the Queensland coal sector into 2023 based on strong production and high prices. NQXT also has strong support from its sponsor which recently infused cash to pre-fund a $140mn debt. Further, around two-thirds of NQXT’s coal volumes comprise metallurgical coal, which face lower ESG challenges.