Outlook Business Desk
In the light of the US indictment of Gautam Adani and other senior executives, Moody’s downgraded the outlook on the ratings of seven Adani Group entities from 'stable' to 'negative'. The downgrade may have a lasting impact on funding received by the conglomerate and increase its cost of capital
The seven entities with a change in their outlook are Adani Ports and Special Economic Zone Ltd, Adani Green Energy Ltd (AGEL), Adani Transmission Step-One Ltd, Adani Transportation, Adani Electricity Mumbai Ltd, and Adani International Container Terminal Pvt Ltd.
The rating change is due to the indictment of Gautam Adani and other senior executives in a bribery and fraud case in the US which involve bribing Indian officials and deceiving investors during a bond offering
Moody’s highlights that governance issues within the group could result in operational disruptions, impacting their capital expenditure plans
Gautam Adani's role as the chairman of the conglomerate, affects all the companies, not just AGEL which is the entity against which the charges have been filed, primarily, hence leaving the group’s credit outlook at the mercy of the upcoming legal outcomes
The outlook on these entities will remain negative, with no immediate upgrade likely. If the legal outcome is in their favor, and they continue to manage financial health and governance changes, a return of a stable outlook is possible. However, if these issues are not addresses the ratings could be downgraded further
Gautam Adani is accused of orchestrating a bribery scheme worth over $250 million to obtain solar contracts. The charges against him include securities fraud, conspiracy, wire fraud, bribery, obstruction of justice, and violations of the US Foreign Corrupt Practices Act