Fitch places some Adani bonds on negative watch after US bribery charges

Investing.com– Fitch ratings placed bonds issued by some units of the Adani Group on watch for a possible downgrade after the Indian conglomerate’s top executives were indicted on U.S. charges of bribery and fraud.

Fitch said it had placed notes issued by Adani Energy Solutions (NS:ADAI), Adani Electricity Mumbai and Adani Transmission Step-One on rating watch negative, which could herald a potential downgrade. The bonds in question are currently rated BBB-.

“The RWN reflects increased corporate governance risk and potential contagion risk that could affect the funding access and liquidity of the Fitch-rated corporate entities related to the Adani group, following the US indictment,” Fitch said. 

The ratings agency said there were no near-term liquidity risks to Adani, but that the U.S. charges could hamper the group’s access to funding in the medium-to-long term. 

“While the US indictment mainly involves AGEL’s key leadership, the proceedings and the outcome could reflect significantly weaker corporate governance practices of the group and lead to negative rating actions,” Fitch said.

U.S. authorities accused Adani founder Gautam Adani and seven other individuals, including his nephew Sagar Adani, of bribing Indian government officials to win lucrative solar power contracts. They also accused Adani of misleading U.S. investors when raising capital through bonds and debt.