Following the US indictment of Adani Group chairman Gautam Adani, his nephew Sagar Adani and six others in an alleged bribery scam, global rating agency Moody’s on Tuesday revised the outlook on seven of the group companies to ‘negative’ from ‘stable’, but Affirmed its ratings on all seven firms.
In the indictment, US prosecutors had alleged that Gautam Adani and seven others bribed Indian government officials to the tune of Rs 2,029 crore (US$265 million) to secure “lucrative solar power supply contracts” with state power distribution companies. Offered or promised to offer.
According to Moody’s, although the allegations and charges brought by the US Attorney’s Office and the Securities and Exchange Commission relate to Gautam Adani and members of the senior management team, “these could have a broad credit impact on all rated Adani Group issuers” given their “prominence”. Given the role of each rated entity or its parent companies as Chairman as well as controlling shareholder”.
Moody’s said the indictment “will weaken Adani Group’s access to funding and increase its cost of capital”.
“The rating action further recognizes the broader weaknesses in the governance structure across the rated Adani Group entities, as well as the potential for potential operational disruptions, including their capital-expenditure plans, while the legal proceedings are ongoing,” it said.
The rating agency said it could “downgrade the ratings of group entities if legal proceedings cause any significant disruption to their operations or access to capital”.
“If the group is unable to address or improve governance issues related to the ongoing legal proceedings, a rating downgrade is also likely,” it added.
‘Rating upgrade unlikely in the near term’
However, Moody’s said, “Given the negative outlook on all seven issuers, a rating upgrade is unlikely in the near term”.
“However, we may change the rating outlook to stable if the legal proceedings clearly conclude without any significant negative credit impact,” it said.
SEC had accused Gautam Adani and Sagar Adani. officials of Adani Green Energy Ltd., and the conduct of Cyril Cabanes, an executive of Azure Power Global Ltd., arose from a large-scale bribery scheme. Adani Group has denied all the allegations and termed them baseless.
Moody’s Ratings said it changed the outlook on seven Adani Group entities including Adani Green Energy Limited Limited Group (AGEL RG-1), Adani Green Energy Limited Limited Group (AGEL RG-2), Adani Transmission Step-One Limited (ATSOL) Is. Adani Transmission Restricted Group 1 (AESL RG1), stable to negative.
The affected entities are Adani Electricity Mumbai Limited (AEML), Adani Ports and Special Economic Zone Limited (APSEZ) and Adani International Container Terminal Private Limited (AICTPL). Rating Outlook is an opinion regarding the likely rating direction in the medium term. A negative, positive or developing outlook indicates a high probability of a rating change in the medium term.
Moody’s action follows Fitch Ratings’ action on Monday, which took negative rating action on Adani Group’s infrastructure units and restricted groups. Last week, S&P Global on Friday revised the outlook on Adani Electricity and APSEZ to ‘negative’, while affirming ‘BBB-‘ ratings on both the companies.
On Tuesday, shares of Adani Group companies fell by 7 percent. Adani Green shares fell 7.05 percent. Adani Enterprises It closed down by 4.78 per cent and Adani Energy Solutions fell by 3.79 per cent on BSE.