Fitch Ratings has placed Adani Group’s three 2023 bonds on negative watch after the company’s CEO, Gautam Adani, and top executives were charged with bribery and corruption by the United States Securities and Exchange Commission (SEC).
The rating agency stated that the charges have increased the risk that the bonds could be downgraded in the near term, citing the potential damage to the company’s reputation, business, and financial position.
Adani Group, an Indian conglomerate with significant interests in infrastructure, power generation, and mining, denied the allegations, describing them as “misguided and malicious” and “without any basis in fact or law.”
The SEC charges stemmed from Adani’s use of a deferred proxy payment structure, which allegedly allowed it to circumvent US regulatory requirements and engage in bribery.
Fitch warned that the bribery charges could lead to significant reputational damage, operational disruption, and increased regulatory scrutiny, all of which could impact Adani Group’s financial performance, credit profile, and bond ratings.
The three Adani bonds affected by the negative watch are:
1. $500 million 5.6% 2023.maturing in May 2023
2. $500 million 4.8% 2025 maturing in September 2025
3. $900 million 4.45% 2028 maturing in May 2028
Fitch stated that it will closely monitor the situation, including the outcome of the SEC charges, any potential repercussions on Adani’s operations and financials, and any measures the company might take to address the allegations, before re-evaluating its ratings and outlook for the affected bonds.