After the indictment by the US Securities and Exchange Commission (SEC), the rating agency Fitch has revised the outlook on four Adani group firms from “stable” to “negative”.
It has also placed three other entities under Rating Watch Negative (RWN) status following the indictment of certain board members of Adani Green Energy Limited (AGEL) by the US on bribery charges.
These entities are Adani International Container Terminal Private Ltd (AICTPL), Adani Green Energy Limited Restricted Group 1 (AGEL RG1), Adani Green Energy Limited Restricted Group 2’s (AGEL RG2) and Adani Energy Solutions Ltd Restricted Group’s (AESL RG).
The entities whose outlook has been revised to “negative” are rated “BBB”.
Further, Fitch has placed Adani Ports and Special Economic Zone Limited (APSEZ) – “BBB-”, North Queensland Export Terminal Pty Ltd (NQXT) – “BB+”, and Mumbai International Airport Limited’s (MIAL) – “BB+” under RWN.
“The RWN on APSEZ, NQXT and MIAL reflects increased corporate governance risk and potential contagion risk that could impact funding access and liquidity of the rated entities, if corporate governance risk materialises following the US indictment,” Fitch said in a statement.
Fitch said ”we will monitor the ongoing investigations for developments impacting financial flexibility of the rated entities, particularly any material deterioration in near- to medium-term funding access, including their ability to roll over existing credit lines or access new facilities, as well as potentially higher funding costs”.
The Negative outlook reflects the risk of higher funding costs and materialisation of weakness in corporate governance and internal controls, it added.
Notably, last week, three AGEL board members were indicted by the US authorities for alleged bribery and providing false and misleading statements to investors in a 2021 offshore note offering.