Fitch puts some Adani bonds on negative watch after US bribery charges

Ratings agency Fitch has put some Adani Group bonds on watch for a possible downgrade after US authorities indicted some key executives of the Indian conglomerate on bribery charges.

Adani Energy Solutions Ltd, Adani Electricity Mumbai and some of Adani Ports and Special Economic Zone rupee and dollar bonds are now on "watch negative", Fitch said in a statement on Tuesday (Nov 26).

Ratings on four Adani subsidiary senior unsecured dollar bonds were downgraded from stable to negative, the agency said.

A ratings watch negative signals a heightened probability of a rating downgrade that could affect the pricing of hundreds of millions of dollars worth of Adani's debt.

Fitch will monitor the US investigation for any impact on Adani's financial position, it added in Tuesday's statement.

Specifically, it would watch for "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 credit spreads," it said.

Rating agency S&P Global put Adani Ports, Adani Green Energy and Adani Electricity on a downgrade warning due to the US indictments.

On Monday French oil major TotalEnergies said it would halt financial contributions to its Adani Group investments following last week's indictment.

US prosecutors have charged billionaire Gautam Adani, the group's founder, his nephew Sagar Adani and six others for their alleged roles in a US$265 million scheme to bribe Indian officials to secure power supply deals.

The Adani Group has dismissed as "baseless and denied" the accusations, along with those made by the US Securities and Exchange Commission in a parallel civil case, adding it would "seek all possible legal recourse".

US authorities said the bribes were paid to win contracts expected to yield US$2 billion of profit over 20 years and develop India's largest solar power plant.

Adani dollar bonds steadied on Tuesday and prices rose slightly after three days of heavy falls.

Prices on some of the more liquid Adani Ports and Special Economic Zone debt maturing between 2027 and 2041 were up between half a cent and 1.5 cents on the dollar. They have fallen about 8 cents to 12 cents since news of the indictment.

Leading ESG ratings provider Morningstar Sustainalytics said it would review Adani Green Energy’s ESG risks.

"No business, green or brown, can represent a good investment opportunity without robust governance policies and practices," Hortense Bioy, its head of sustainable investing research, said in an email.

This week, Japan's SBI Asset Management published the extent of exposure to Adani Group entities of four of the funds it manages.

Its SBI/UTI India Infrastructure Equity Fund had the highest exposure at 2.55 per cent, while that of the other three ranged from 2.08 per cent to 0.21 per cent, SBI said in a statement.