Moody’s revises outlook on 4 Adani Group entities to negative

These rating actions follow the significant and rapid decline in the market equity values of the Adani Group companies following the recent release of a report from a short-seller highlighting governance concerns in the Group.

The change in the outlook to negative on AGEL considers the company’s large capital spending program and dependence on sponsor support, potentially in the form of subordinated debt or shareholder loans, which will likely be less certain in the current environment, the rating agency said.

“The negative outlook also factors in AGEL’s significant refinancing needs of around $2.7 billion in fiscal year ending March 2025 (fiscal 2025) and limited headroom in its credit metrics to manage any material increase in funding costs,” it said.

The change in outlook on AGEL RG-1 also takes into account the refinance risk associated with $500 million of bonds maturing in December 2024.

Moody’s, however, maintained a stable outlook on Adani Ports; Adani Container Terminal and Adani Green Energy Restricted Group (AGEL RG-2).

The outlook on Adani Transmission Restricted Group 1 (ATL RG1) comprising Barmer Power Transmission Service; Raipur-Rajnandgaon-Warora Transmission; Sipat Transmission; Thar

Power Transmission Service; Hadoti Power Transmission Service; Chhattisgarh-WR Transmission is also maintained as stable, the agency said.

Earlier this week, Moody’s in a report had said that the domestic banks’ exposure to the Adani Group is not large enough to affect their credit quality materially. However, if domestic banks become the main source of funding for the Adani Group, it could lead to increase in banks’ exposures to the Group and greater risks for them, the rating agency had said.

Last week, S&P Global Ratings revised the rating outlook of Adani Electricity Mumbai Ltd and Adani Ports and Special Economic Zone Ltd to negative from stable, but reaffirmed their ratings.