After Fitch, Moody’s also switches outlook on Adani group firms to ‘negative’

Moody's and Fitch downgrade Adani Group companies due to governance risks and legal issues, impacting ratings and outlooks.

Moody’s Ratings has on Tuesday (November 26, 2024) affirmed the ratings of seven Adani Group companies from ‘stable’ to ‘negative’. In a statement the global rating firm said “At the same time, we have changed the outlook on all seven issuers to negative from stable.”

Earlier on Tuesday (November 26, 2024) Fitch Ratings also put Adani group firms on a negative rating watch.

The seven affected issuers are:

1. Adani Green Energy Limited Restricted Group (AGEL RG-1), which comprises Adani Green Energy (UP) Limited; Parampujya Solar Energy Private Limited; Prayatna Developers Private Limited, 2. Adani Green Energy Limited Restricted Group (AGEL RG-2), which comprises Wardha Solar (Maharashtra) Private Limited, Kodangal Solar Parks Private Limited and Adani Renewable Energy (Rj) Limited, 3. Adani Transmission Step-One Limited (ATSOL), Adani Transmission Restricted Group 1 (AESL RG1), which comprises Barmer Power Transmission Service Limited; Raipur-Rajnandgaon-Warora Transmission Ltd; Sipat Transmission Limited; Thar Power Transmission Service Limited; Hadoti Power Transmission Service Limited; Chhattisgarh-WR Transmission Limited, and 5. Adani Electricity Mumbai Limited (AEML).

Adani Ports and Special Economic Zone Limited (APSEZ) and Adani International Container Terminal Private Ltd (AICTPL) have also been subjected to an outlook change from stable to negative, Moody’s said.

Moody’s said its rating actions follow the indictment of Adani Green Energy Ltd’s (AGEL) chairman Gautam Adani and several senior management team members by the US Attorney’s Office in a criminal case and the filing of charges by the US Securities and Exchange Commission (SEC) in a civil case. The charges and allegations include: (1) bribery of Indian government officials, (2) securities and wire fraud, (3) conspiracy to violate the US Foreign Corrupt Practices Act and obstruct justice, (4) false statements made in AGEL’s annual reports, and (5) false statements made to the US government in relation to its investigation into the group.

Identifying governance risks as material for its rating action, Moody’s said the negative outlook considers that this indictment of Mr. Adani and other senior Adani executives “will likely weaken Adani Group’s access to funding and increase its capital costs” and recognises “the possibility of broader weaknesses in the governance structure across the rated Adani group entities as well as potential operational disruptions, including on their capital spending plans, while legal proceedings are going”.