New Delhi: Fitch Ratings has removed Adani Energy Solutions Ltd from a rating watch and assigned it a negative outlook, saying Adani group has demonstrated adequate funding access since the US indictment of its key executives.
Fitch Ratings affirmed Adani Energy Solutions Limited’s (AESL) long-term foreign- and local-currency issuer default ratings (IDRs) at ‘BBB-‘.
“The ratings have been removed from Rating Watch Negative and assigned a Negative Outlook,” it said in a statement.
The rating agency said the Adani group has “demonstrated adequate funding access” since its chairman Gautam Adani and two other key executives were indicted in the US court on allegations of being part of a bribery scheme to win a renewable energy supply contract.
“We believe the risks associated with the group’s liquidity and funding requirements have moderated,” it said.
“However, the Outlook is Negative to reflect our view that the proceedings and outcome of the US investigations could reveal that the group’s corporate governance practices are weaker than we expected and lead to negative rating action in the near to medium term.”
Fitch said it will monitor the investigations for any evidence of weakness in the entities’ governance practices and internal controls and the impact on AESL’s financial flexibility.
The indictment, it said, for alleged securities and wire fraud reflects a corporate governance risk for AESL.
“A conviction or any indication of weaknesses in Adani group entities’ governance practices and internal controls that may come to light as part of the process could put pressure on the ratings.”
Proceedings and the outcome of the US investigations could hamper the group’s funding access, he said, adding that AESL has demonstrated adequate funding access since the US indictment, having drawn Rs 5,100 crore from onshore and offshore banking facilities.
The group company, AGEL, has also raised onshore funding to refinance its USD 1.1 billion construction-linked facility, which was due in March 2025.
ADANI PORTS
Separately, Fitch Ratings affirmed the ‘BBB-‘ rating on Adani Ports and Special Economic Zone Limited removed it from Rating Watch Negative (RWN). The outlook, however, is negative.
“The rating affirmation follows the demonstration of adequate funding access by the Adani group, following the US indictment of certain board members of another group entity, Adani Green Energy Limited (AGEL), on November 20, 2024,” it said.
“We believe the risk associated with the group’s liquidity and funding requirements has moderated. However, the Negative Outlook reflects our view that the proceedings and outcome of the US investigations could reveal further weaknesses in the group’s corporate governance practices, which may lead to negative rating action in the near to medium term.”
The rating continues to reflect APSEZ’s strong business and financial profile, underpinned by a robust portfolio of seaports and an adequate liquidity position. Its cash balance of Rs 7,700 crore as of December 2024 and strong operating cash flow should cover debt maturities of Rs 6,600 crore during the financial year ending March 2026 (FY26) and fund its capex.
ADANI GROUP INFRASTRUCTURE ENTITIES
Fitch Ratings revised the outlook on Adani group entities to stable from negative and affirmed the ratings at ‘BBB-‘.
These entities are Adani International Container Terminal Private Limited’s (AICTPL) US dollar senior secured bonds, Adani Green Energy Limited Restricted Group 1’s (AGEL RG1) US dollar senior secured bonds, Adani Green Energy Limited Restricted Group 2’s (AGEL RG2) US dollar senior secured bonds, and Adani Energy Solutions Limited restricted group’s (AESL RG) US dollar senior secured bonds.
Fitch also removed the Rating Watch Negative (RWN) on Mumbai International Airport Limited’s (MIAL) US dollar senior secured bonds affirmed at ‘BB+’ with a Negative Outlook and North Queensland Export Terminal Pty Ltd’s (NQXT) Australian dollar senior secured bonds affirmed at ‘BB+’ with a stable outlook.
Fitch’s affirmation of the ratings follows a demonstration of adequate funding access by Adani group entities since the US indictment, the rating agency said in a separate statement.
“We believe the risks associated with the group’s liquidity and funding requirements have moderated, which is reflected in the successful refinancing of NQXT’s AUD 329 million term loan due in June 2025 through a private placement ahead of its maturity. At the group level, AGEL has also raised long-term onshore funding to refinance its USD 1.1 billion construction-linked facility, which was due in March 2025,” it said.
