Adani Group Faces New Challenges: Moody's and Fitch Lower Ratings Outlook Amid US Bribery Scandal

The Adani Group faces fresh turmoil as Moody's Ratings announced a shift in the outlook for seven Adani Group companies, including Adani Green Energy and Adani Ports, from stable to negative following a US bribery scandal.

Moody's Ratings Update

"We have changed the outlook on all seven issuers to negative from stable," Moody's stated. Affected entities include:

Adani Green Energy (two units)

Adani Transmission (two units)

Adani Electricity Mumbai Ltd

Adani Ports and Special Economic Zone Limited (APSEZ)

Adani International Container Terminal

The changes were prompted by criminal charges against Adani Green Energy Ltd’s (AGEL) chairman Gautam Adani and senior executives, filed by the US Attorney's Office, alongside civil charges from the US Securities and Exchange Commission (SEC).

Impact on the Adani Group

Moody's highlighted that these developments could hinder the group’s funding access and escalate capital expenses. Governance concerns across Adani entities and possible operational disruptions were also cited, potentially affecting capital expenditure plans amid ongoing legal issues.

The agency affirmed its existing ratings:

Ba1 for Adani Green Energy

Baa3 for Adani Transmission, Adani Electricity, Adani Ports, and Adani International Container Terminal

However, it noted that a ratings upgrade is unlikely in the near term due to the negative outlook. Stability could return if legal proceedings conclude without significant credit impact.

Fitch Ratings Actions

Fitch Ratings has also taken negative actions, placing various Adani Group entities and bonds under review for potential downgrade. This includes:

Adani Ports

North Queensland Export Terminal

Mumbai International Airport

Fitch expressed concerns over funding access, rising costs, and governance but noted that short-term liquidity remains adequate for most entities. Specific bonds issued by Adani Ports and Adani Electricity Mumbai have been placed on "rating watch negative," and ratings on four senior unsecured dollar bonds have shifted from stable to negative.

Investor Confidence

Despite the ongoing scrutiny, GQG Partners, Adani's leading foreign investor, reaffirmed its confidence in the group. In a memo, GQG emphasized the companies' strong fundamentals and stated:

"We believe this level of exposure is manageable, even given the volatility in Adani Group stocks."

The developments cast uncertainty over the Adani Group's future, with legal and financial challenges potentially impacting its operations and investor trust.