Vedanta has postponed its planned dollar bond issuance, citing concerns over potential increases in borrowing costs for Indian companies. This decision comes shortly after the indictment of Adani Group Chairperson Gautam Adani by a U.S. court, which has sent shockwaves through the corporate sector. Reports from Reuters and Bloomberg highlight that Vedanta’s move closely follows Adani Green Energy Ltd. withdrawal of its own planned dollar bond issuance.
The fallout from the indictment has raised questions about the future of Adani Group’s deals. Investors are now closely monitoring whether more projects tied to the conglomerate will be impacted.
International deals cancelled
In Kenya, two major agreements involving the Adani Group have been scrapped. The first, a $2 billion procurement process to manage the country’s main airport, was cancelled. Additionally, a 30-year, $736-million public-private partnership deal signed last month for constructing power transmission lines was also terminated.
Despite the Adani Group’s significant presence in India, analysts at Citigroup have pointed out that Indian banks’ exposure to the group remains limited, accounting for less than 1% of total loans for most lenders.
Adani Ports and Special Economic Zone bonds, maturing in 2027, have dropped to 91.5 cents on the dollar, losing over one cent on the day and more than four cents compared to Wednesday’s prices. Longer-dated bonds have seen a sharper decline, trading near 80 cents, a drop of around five cents in just two days.
Market reaction
The Adani Group’s stocks and bonds have come under heavy selling pressure for a second consecutive session following the issuance of a U.S. arrest warrant against Gautam Adani. The billionaire and seven others are accused of paying $265 million in bribes to Indian government officials to secure contracts worth $2 billion in profits over 20 years, including the development of India’s largest solar power project.
Since the news broke, the market value has plunged by $33 billion, with Adani Green Energy alone losing $7 billion. On Friday morning, eight of the 10 listed Adani firms experienced sharp declines:
Adani Green Energy: down 10.95%
Adani Energy Solutions: down 8.57%
Adani Enterprises (flagship firm): down 6.98%
Adani Power: down 6.38%
Adani Total Gas: down 6.11%
Adani Ports: down 5.31%
Adani Wilmar: down 5.17%
While the stocks saw a slight recovery during midday trading, gaining up to 6%, the damage to investor sentiment remains significant.
