Foreign currency bond ratings of Adani in negative watch
ECONOMY & POLICY

Foreign currency bond ratings of Adani in negative watch

Fitch Ratings has placed several foreign currency bond ratings of Adani Group entities under 'negative watch' following the indictment initiated by the US Securities and Exchange Commission and the Department of Justice against Gautam Adani, the group chairman, and board members of Adani Green Energy Ltd.

The ratings affected include the Long-Term US dollar senior unsecured bonds of Adani Ports and Special Economic Zone Ltd (APSEZ), the Australian dollar senior secured bonds of North Queensland Export Terminal Pty Ltd (NQXT), and the US dollar senior secured bonds of Mumbai International Airport Ltd (MIAL). Fitch explained that the Rating Watch Negative (RWN) reflects heightened corporate governance risks and potential contagion effects that could affect funding access and liquidity for these entities if the governance concerns materialise as a result of the US indictment.

Fitch further noted that while the indictment primarily involves key leadership at Adani Green Energy Ltd (AGEL), the outcome could indicate significantly weaker corporate governance across the Adani Group. This, they stated, might lead to additional negative rating actions. The agency pointed out that two of the indicted board members are part of the founding shareholders of the Adani Group, which owns a majority stake in all rated entities, and these directors also serve on the boards of other rated entities, amplifying the risk of contagion and governance concerns across the group.

The agency has also revised the outlook from 'Stable' to 'Negative' for the ratings of Adani International Container Terminal Private Ltd (AICTPL), Adani Green Energy Ltd Restricted Group 1 (AGEL RG1), Adani Green Energy Ltd Restricted Group 2 (AGEL RG2), and Adani Energy Solutions Ltd Restricted Group (AESL RG) US dollar senior secured bonds. Fitch clarified that the ratings of these entities were affirmed due to the ring-fencing structure of their restricted groups, stable operating cash flows, and nearly fully amortising debt, which minimise potential contagion impacts. However, the Negative Outlook reflects risks of higher funding costs and weaknesses in governance and internal controls.

Fitch acknowledged that while the rated entities currently have sufficient near-term liquidity, the medium-term funding outlook could be adversely impacted by these developments. The group may face challenges in securing offshore funding, increasing reliance on onshore sources, which could heighten refinancing risks and reduce operating cash flows due to higher funding costs. Fitch warned that such developments could significantly affect growth plans for entities like APSEZ, although the company has some flexibility in its capital expenditure plans.

According to the indictment, between 2020 and 2024, Gautam Adani and other executives allegedly agreed to pay over $250 million in bribes to Indian government officials to secure lucrative solar energy supply contracts.

Fitch Ratings has placed several foreign currency bond ratings of Adani Group entities under 'negative watch' following the indictment initiated by the US Securities and Exchange Commission and the Department of Justice against Gautam Adani, the group chairman, and board members of Adani Green Energy Ltd. The ratings affected include the Long-Term US dollar senior unsecured bonds of Adani Ports and Special Economic Zone Ltd (APSEZ), the Australian dollar senior secured bonds of North Queensland Export Terminal Pty Ltd (NQXT), and the US dollar senior secured bonds of Mumbai International Airport Ltd (MIAL). Fitch explained that the Rating Watch Negative (RWN) reflects heightened corporate governance risks and potential contagion effects that could affect funding access and liquidity for these entities if the governance concerns materialise as a result of the US indictment. Fitch further noted that while the indictment primarily involves key leadership at Adani Green Energy Ltd (AGEL), the outcome could indicate significantly weaker corporate governance across the Adani Group. This, they stated, might lead to additional negative rating actions. The agency pointed out that two of the indicted board members are part of the founding shareholders of the Adani Group, which owns a majority stake in all rated entities, and these directors also serve on the boards of other rated entities, amplifying the risk of contagion and governance concerns across the group. The agency has also revised the outlook from 'Stable' to 'Negative' for the ratings of Adani International Container Terminal Private Ltd (AICTPL), Adani Green Energy Ltd Restricted Group 1 (AGEL RG1), Adani Green Energy Ltd Restricted Group 2 (AGEL RG2), and Adani Energy Solutions Ltd Restricted Group (AESL RG) US dollar senior secured bonds. Fitch clarified that the ratings of these entities were affirmed due to the ring-fencing structure of their restricted groups, stable operating cash flows, and nearly fully amortising debt, which minimise potential contagion impacts. However, the Negative Outlook reflects risks of higher funding costs and weaknesses in governance and internal controls. Fitch acknowledged that while the rated entities currently have sufficient near-term liquidity, the medium-term funding outlook could be adversely impacted by these developments. The group may face challenges in securing offshore funding, increasing reliance on onshore sources, which could heighten refinancing risks and reduce operating cash flows due to higher funding costs. Fitch warned that such developments could significantly affect growth plans for entities like APSEZ, although the company has some flexibility in its capital expenditure plans. According to the indictment, between 2020 and 2024, Gautam Adani and other executives allegedly agreed to pay over $250 million in bribes to Indian government officials to secure lucrative solar energy supply contracts.

Next Story
Infrastructure Urban

IT Raids on Gujarat Builders Uncover Rs 100 Million

The Income Tax (IT) department's ongoing search at the premises of three builder groups in the state has led to the recovery of more than Rs 100 million in cash and incriminating documents, according to sources. Initially, 34 locations were targeted in the operation, but six additional sites were subsequently included, increasing the total to 40. Sources revealed that during the preliminary investigation, officials uncovered fake loan entries, bogus transactions, and undisclosed investments in land and properties that were not reflected in the final accounts. The full extent of the tax evasi..

Next Story
Infrastructure Energy

Ethanol Blending Hits 14.6%, Saving Rs 750 Billion in Forex Since 2018

Ethanol blending in petrol reached a record 14.6 per cent during the Ethanol Supply Year (ESY) 2023-24, with over 7 billion litres of ethanol blended, representing a notable rise from 5 per cent and 1.88 billion litres in ESY 2018-19. Minister of State for Petroleum and Natural Gas, Suresh Gopi, informed the Rajya Sabha about this development. He noted that the government’s Ethanol Blended Petrol (EBP) Programme had achieved nationwide coverage across all retail outlets as of 2024, up from 43,168 outlets in 2019. According to data provided by the Petroleum Planning and Analysis Cell (PPAC)..

Next Story
Infrastructure Energy

Coal ministry picks applicants for Rs 85 billion gasification scheme

The Ministry of Coal recently announced the selected applicants for its Rs 85 billion Coal Gasification Incentive Scheme under Categories I and III. This initiative is part of the government’s efforts to promote cleaner energy solutions and achieve India’s target of 100 million tonnes of coal gasification by 2030. Under Category I, Bharat Coal Gasification and Chemicals, along with Coal India Limited (both independently and as part of the CIL-GAIL Consortium), have been chosen. Meanwhile, New Era Cleantech Solution has been selected under Category III. The Union Cabinet-approved scheme f..

Hi There!

"Now get regular updates from CW Magazine on WhatsApp!

Join the CW WhatsApp channel for the latest news, industry events, expert insights, and project updates from the construction and infrastructure industry.

Click the link below to join"

+91 81086 03000