Agencies
Credit rating agency Fitch put some bonds of India’s conglomerate Adani Group on a watch list for a possible downgrade and has placed some of its entities on ratings "watch negative” following U.S. charges against its founder, Gautam Adani.
At the same time, Sri Lanka was also weighing the accusations as fallout from indictments of some key executives of the Indian conglomerate widens.
U.S. prosecutors have charged billionaire Gautam Adani, the group’s founder, his nephew Sagar Adani and six others for their alleged roles in a $265 million scheme to bribe Indian officials to secure power supply deals.
Adani Ports, India’s largest private ports operator, owns 51% of a new container terminal project expected to begin operations next year in neighboring Sri Lanka’s city of Colombo.
Sri Lanka’s finance and foreign ministries were reviewing the accusations, Cabinet spokesperson Nalinda Jayatissa told reporters on Tuesday, adding that the government would consider all aspects of the group’s projects in the Indian Ocean island.
Jayatissa declined to say how long it would take to assess the ministerial reports.
The comments came days after a U.S. agency that agreed to lend more than $550 million to the Sri Lankan port development said it reviewed the impact of the bribery accusations against some key Adani executives.
The Adani Group has dismissed the accusations as "baseless and denied,” along with those made by the U.S. Securities and Exchange Commission (SEC) in a parallel civil case, adding it would "seek all possible legal recourse.” On Tuesday, ratings agency Fitch also put some Adani Group bonds on watch for a possible downgrade, citing the indictment.
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.
The agency said that ratings on four Adani subsidiary senior unsecured dollar bonds were downgraded from stable to negative.
Adani stocks opened further down on Tuesday. Of 10 listed companies that have lost about $33 billion in market value since the indictment, Adani Green has been the hardest hit, giving up about $9.7 billion.
The stock was down 7.5% on Tuesday.
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 U.S. 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 U.S. indictments.