Moody’s Investor Group announced on February 13 a revision in the outlook on debt papers for four Adani Group companies, shifting from negative to stable. Concurrently, the rating agency maintained a stable outlook for the remaining four companies and affirmed the ratings for all eight entities within the conglomerate.
This action by Moody’s comes after S&P Global Ratings upgraded the credit outlook for Adani Ports and Adani Electricity to ‘stable’ from ‘negative.’ In February 2023, Moody’s initially revised the outlook on four Adani Group companies to negative due to concerns over their access to capital and potential increases in capital costs following a report by Hindenburg Research, a short seller, highlighting governance concerns within the Adani Group. The companies experiencing a positive shift in their rating outlooks are Adani Green Energy Limited, Adani Green Energy Restricted Group, Adani Transmission Step-One Limited, and Adani Electricity Mumbai Limited.
Conversely, the stable outlook was retained for Adani Green Energy Restricted Group, Adani Energy Solutions Limited Restricted Group 1 (AESL RG1), Adani Ports and Special Economic Zone Limited (APSEZ), and Adani International Container Terminal Private Ltd (AICTPL).
The report raised concerns about the governance practices of the Adani Group, which led to significant and rapid declines in the market value of the Adani Group companies’ securities. Moody’s stated, “In the ensuing period, the Group has completed a number of debt transactions, including refinancing as well as obtaining new loan facilities, demonstrating its continued access to debt capital at a reasonable cost. At the same time, several high-profile equity transactions by large institutional and strategic investors, such as GQG and Qatar Investment Authority, also demonstrated the Group’s continued equity market access.”
While an ongoing investigation by the Securities and Exchange Board of India (SEBI) is still in progress, Moody’s noted that the Supreme Court’s decision to entrust SEBI with completing the investigation and the court’s view that there is no apparent regulatory failure attributable to SEBI have alleviated potential tail risks in a downside scenario.
