No Immediate Impact on Rated Adani Entities’ Credit Profiles from ”Short-Seller Report” : Fitch Ratings

Biznextindia : Amid crash in Adani Group stocks, Fitch Ratings on Friday said that there is no immediate impact on the ratings of the Fitch-rated Adani entities and their securities following a “short-seller report” alleging malpractices at India’s Adani group, and expects no material changes to its forecast cash flow.

“There are also no near-term significant offshore bond maturities – earliest in June 2024 for Adani Ports and Special Economic Zone Limited (APSEZ, BBB-/Stable); December 2024 for Adani Green Energy Limited Restricted Group 1 (AGEL RG1, BB+/Stable); and 2026 or beyond for all other entities – reducing refinancing risks and near-term liquidity risks” Fitch said.

“Our ongoing monitoring will be looking closely at any major changes to the rated entities’ access to financing or cost of financing on a long-term basis, unfavourable regulatory/legal developments or ESG-related matters that could affect credit profiles” it added.

Hindenburg Research published a report on 24 January 2023, alleging various purported malpractices leading to a downfall in the share and bond prices of various group entities despite the group publishing its response on 30 January 2023.

Fitch currently has ratings on eight entities/restricted groups within the Adani group – Adani Transmission Limited (ATL, BBB-/Stable); Adani Electricity Mumbai Limited (AEML, senior secured US dollar notes rated at ‘BBB-’); APSEZ; Adani International Container Terminal Private Limited (AICTPL, senior secured US dollar notes rated at ‘BBB-’/Stable); Adani Transmission Restricted Group 1 (ATL RG1, BBB-/Stable); Adani Green Energy Restricted Group 2 (AGEL RG2, senior secured US dollar notes ‘BBB-’/Stable); AGEL RG1 and Mumbai International Airport Limited (MIAL, senior secured US dollar notes ‘BB+’/Stable).

ATL RG1 restricted group includes six co-issuers – Barmer Power Transmission Service Limited, Chhattisgarh-WR Transmission Limited, Hadoti Power Transmission Service Limited, Raipur-Rajnandgaon-Warora Transmission Limited, Sipat Transmission Limited and Thar Power Transmission Service Limited – and one non-issuing SPV, Adani Transmission (Rajasthan) Ltd (ATRL).

The rated businesses are separately listed (directly or effectively), operate in utility or infrastructure businesses, and with relatively stable cash flow. The founding shareholders of Adani group effectively own the majority of shares. Some of the rated businesses (AEML and AGEL RG1) have strategic investors with board representation. Furthermore, the offshore bonds of all rated entities except APSEZ incorporate a cash flow waterfall mechanism and covenants which restrict cash upstreaming to shareholders and limit indebtedness.