Moody's and Fitch take rating action against Adani group companies

Two global rating agencies, Moody’s and Fitch, downgraded the outlook for several Adani group companies from “stable” to “negative” on Tuesday, citing escalating legal and governance risks. Fitch also placed certain Adani firms under the “Rating Watch Negative (RWN)” status. 

 

The rating action by Moody’s, Fitch, and earlier S&P Global may weaken the group’s access to external funding and increase its capital costs.

 

The downgrades follow bribery charges filed last week by the US Securities and Exchange Commission (SEC) in a New York district court against the group’s founder, Gautam Adani, and seven others in connection with projects under Adani Green Energy Limited (AGEL).

 

Moody’s affirmed the ratings for seven Adani group issuers while revising their outlook to negative. These include Adani Green Energy Ltd Restricted Group 1 (AGEL RG1) and Group 2 (AGEL RG2), both rated “Ba1,” and Adani Transmission Step-One Ltd (ATSOL), rated “Baa3.” The outlook for four other entities — Adani Transmission Restricted Group 1 (AESL RG1), Adani Electricity Mumbai Ltd (AEML), Adani Ports and Special Economic Zone Ltd (APSEZ), and Adani International Container Terminal Private Ltd (AICTPL) — was also downgraded to negative, with all carrying a “Baa3” rating. 

 

Moody’s stated that the allegations involve bribery of Indian government officials, securities and wire fraud, conspiracy to violate the US Foreign Corrupt Practices Act, obstruction of justice, and false statements in AGEL’s annual reports. 

 

Meanwhile, Fitch revised the outlook to “negative” for Adani International Container Terminal (AICTPL), AGEL RG1, AGEL RG2, and Adani Energy Solutions Ltd Restricted Group (AESL RG), all rated “BBB.” Fitch highlighted the risk of higher funding costs and weaknesses in corporate governance and internal controls. 

 

Additionally, it placed APSEZ, rated “BBB-,” North Queensland Export Terminal Pty Ltd (NQXT), rated “BB+,” and Mumbai International Airport Ltd (MIAL), also rated “BB+,” under its RWN status. Fitch cited increased corporate governance risks and the potential for contagion effects that could disrupt funding access and liquidity. 

 

Earlier, peer rating agency S&P Global also downgraded its outlook to “negative” for Adani Electricity Mumbai Ltd, APSEZ, and AGEL RG2, pointing to similar concerns over governance and funding vulnerabilities. 

 

Following the rating action, shares of all 10 listed Adani group companies slipped during the trading session on Tuesday, after a short-lived recovery for some of those stocks in the previous couple of sessions. Shares of AGEL declined 7.1 per cent to Rs 899.4 apiece on Tuesday, while those of the flagship Adani Enterprises slipped nearly 5 per cent to Rs 2,149.8 apiece.