business & investment

Fitch Ratings has assigned a National Long-Term Rating of ‘A(lka)’ to WindForce PLC’s proposed senior unsecured redeemable debentures of up to LKR 4 billion. The instruments are rated one notch below WindForce’s National Long-Term Rating of ‘A+(lka)’/Stable, primarily due to increasing structural subordination arising from secured borrowings at its operating subsidiaries, which are being used to finance ongoing capacity expansion.

WindForce’s rating reflects its expanding scale as a major renewable energy producer in Sri Lanka and selected regional markets, supported by improving resource diversification and strong contracted cash flows from long-term power purchase agreements (PPAs). However, the rating remains constrained by the credit profile of its key state-owned offtaker, National System Operator (Pvt) Ltd (NSO), the successor entity to the Ceylon Electricity Board following restructuring. Revenue from the state-owned utility continues to account for more than 80% of WindForce’s EBIT.

Fitch forecasts that WindForce’s EBITDA net leverage will increase in the financial year ending March 2027 (FY27), driven by debt-funded capital expenditure for new generation projects, before declining thereafter as new assets become operational. This trajectory supports a Stable Outlook. However, failure to deleverage in FY28 in line with expectations could place downward pressure on the rating.

Key Rating Drivers

Temporarily Elevated Leverage Due to Expansion Capex:

WindForce plans capital expenditure exceeding LKR 40 billion over the next two years for solar and wind power developments. A significant portion of this investment has been deferred to FY27 due to extended supplier negotiations, resulting in higher near-term leverage. Fitch expects EBITDA net leverage to peak at around 9.0x in FY27, above previous projections, before improving to approximately 5.0x in FY28 as new projects begin generating cash flows.

Key investments include a 100MW solar power plant with integrated battery storage and a 130MW battery energy storage system distributed across 13 locations nationwide. Cash flows from these projects are expected only from FY28, reflecting the delayed commissioning timeline.

Execution risks are assessed as low, supported by WindForce’s track record in similar developments, established joint-venture partnerships, and the relatively straightforward construction profile of solar and wind assets. Required regulatory approvals and power purchase agreements with NSO are already in place, while evacuation infrastructure has been completed or secured through established rights-of-way. The long-term PPAs, with predetermined tariffs, help mitigate price risk, while priority dispatch for renewable energy projects ensures stable demand.

Sri Lanka’s official reserve assets declined by 3.5% in March 2026, according to the latest data released by the Central Bank of Sri Lanka.

The country’s total official reserves stood at US$ 7,019 million at the end of March 2026, compared to US$ 7,270 million recorded at the end of February. In February, Sri Lanka’s reserves had surpassed the US$ 7 billion mark for the first time in five and a half years.

Foreign currency reserves, which form the largest component of total reserves, declined by 3.8% to US$ 6,793 million in March, down from US$ 7,057 million in the previous month.

In contrast, gold reserves held by the central bank recorded an increase of 10.8%, rising to US$ 222 million in March from US$ 200 million in February.