Fitch Warns Adani Ports’ Dollar Bonds May Be Cut to Junk
Dollar bonds of Adani Group’s ports business may be cut to speculative grade after US prosecutors brought charges of alleged bribery against executives of the conglomerate, Fitch Ratings said Tuesday.
Adani Ports & Special Economic Zone Ltd.’s unsecured dollar bonds currently have BBB- ratings, the lowest investment-grade score. A cut to those ratings would result in them falling to junk, a level at which some investors cannot hold the notes in their portfolios.
The move “reflects increased corporate governance risk and potential contagion risk that could impact funding access and liquidity of the rated entities” following the US indictment, according to Fitch.
The indictment by US prosecutors last week wiped almost $27 billion from the group’s market value at one point, has driven a decline in its dollar bonds and forced one of its entities to cancel a $600 million bond offering.
The Adani Group, which has denied the allegations, said Monday that its cash balances exceed long-term debt repayments for the next 28 months.
Some other notes of group companies including those of Mumbai International Airport Ltd., that already have speculative-grade ratings, were also put on watch for potential downgrades.
Fitch also revised to negative from stable its outlook on secured bonds of several group firms including those of Adani Green Energy entities, while affirming the ratings.
S&P Global Ratings last week revised to negative its credit outlook for multiple Adani Group entities, citing funding access and financing-cost concerns following the US bribery charges.
After falling last week and Monday, dollar bonds of Adani Group companies rose by 0.6 cents on average on Tuesday, according to data compiled by Bloomberg.
