Ratings agency Fitch has placed several Adani Group bonds on “watch negative” after US authorities indicted key executives of the Indian conglomerate, including founder Gautam Adani and his nephew Sagar Adani, on bribery charges. The allegations involve a $265-million scheme to secure power supply contracts in India, expected to generate $2 billion in profit over 20 years.
Among the affected entities are Adani Energy Solutions Ltd, Adani Electricity Mumbai, and Adani Ports and Special Economic Zone. Fitch downgraded ratings on four senior unsecured dollar bonds issued by Adani subsidiaries from “stable” to “negative.” The agency signaled a heightened risk of further downgrades, which could impact the pricing of Adani’s debt. Fitch plans to closely monitor the US investigation, focusing on potential disruptions to Adani’s financial stability, including challenges in rolling over existing credit lines or accessing new funding.
Similarly, S&P Global has issued downgrade warnings for Adani Ports, Adani Green Energy, and Adani Electricity due to the indictments. Adding to the pressure, French oil major TotalEnergies announced it would suspend financial contributions to its investments in Adani Group projects. The Paris-based company, which holds key stakes in Adani Group’s renewable energy and gas distribution ventures, stated that it was unaware of the US investigation into corruption allegations involving the Indian group’s solar power business.
In response to the allegations, Adani Group dismissed the charges as “baseless” and vowed to pursue legal remedies. The group also denied allegations from the US Securities and Exchange Commission in a parallel civil case.
Despite the ongoing scrutiny, Adani’s dollar bonds steadied on Tuesday after three consecutive days of declines. Prices on Adani Ports and Special Economic Zone bonds maturing between 2027 and 2041 saw slight recoveries, gaining between half a cent and 1.5 cents on the dollar. However, these bonds remain 8 to 12 cents lower than before the indictment news broke.
Morningstar Sustainalytics, a leading ESG ratings provider, announced plans to review Adani Green Energy’s ESG risk profile. Meanwhile, Japan’s SBI Asset Management disclosed its exposure to Adani Group entities across four of its funds, with the SBI/UTI India Infrastructure Equity Fund showing the highest exposure at 2.55%.
The developments mark a critical moment for the Adani Group, as it faces mounting legal, financial, and reputational challenges. Investors and rating agencies will continue to watch closely as the situation unfolds.
