Moody’s has affirmed the ratings of seven Adani Group companies but changed the outlook for all of them from stable to negative. These companies include various entities in the Adani Green Energy, Adani Transmission, Adani Electricity Mumbai, Adani Ports, and Adani International Container Terminal sectors.
The outlook change comes after criminal charges were filed against Gautam Adani, the chairman of Adani Green Energy Ltd (AGEL), and other senior management by the US Attorney’s Office and the SEC. The charges involve bribery, fraud, conspiracy, and false statements made in AGEL’s reports and to the US government.
This situation could harm Adani Group’s ability to raise funds and increase capital costs. Moody’s sees potential governance weaknesses in the group and possible operational disruptions, particularly regarding their spending plans amid the ongoing legal proceedings.
Key Ratings and Outlooks:
AGEL RG-1 & RG-2 (Green energy groups) – Ratings affirmed at Ba1; outlook negative.
Adani Transmission Step-One Ltd (ATSOL) – Ratings affirmed at Baa3; outlook negative.
Adani Transmission Restricted Group 1 (AESL RG1) – Ratings affirmed at Baa3; outlook negative.
Adani Electricity Mumbai Ltd (AEML) – Ratings affirmed at Baa3; outlook negative.
Adani Ports and Special Economic Zone Ltd (APSEZ) – Ratings affirmed at Baa3; outlook negative.
Adani International Container Terminal Pvt Ltd (AICTPL) – Ratings affirmed at Baa3; outlook negative.
These ratings are primarily based on their predictable revenues, mainly from long-term contracts in power, transmission, ports, and container terminal sectors. However, these companies face governance risks due to the ongoing legal issues tied to their leadership.
Factors Affecting Future Ratings:
Upgrades: Unlikely in the short term. However, if legal proceedings end without major negative impacts and the group strengthens its governance, ratings could stabilize.
Downgrades: Likely if the legal issues disrupt operations or access to funding. A downgrade could also occur if financial metrics deteriorate or if governance issues remain unresolved. Additionally, any deterioration in India’s sovereign rating could affect these companies’ ratings.
The group faces risks related to refinancing, governance, and operational disruptions, which could impact their long-term financial health and capital access.
Source: Moody’s Report
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