Moody's Changes Outlook On Four Adani Group Companies To 'Negative'
Moody's affirmed ratings on eight Adani Group companies, and changed outlook to 'negative' on four of them.
Ratings agency Moody's has changed its outlook for four Adani Group companies to 'negative' from 'stable', following a "significant and rapid decline in the market equity values".
In a statement on Friday, Moody's said that it has taken ratings action on eight Adani Group companies. The agency affirmed ratings on all eight companies, but changed the outlook on four of them to 'negative' from 'stable'.
The outlook has been downgraded for Adani Green Energy Ltd., Adani Green Energy Restricted Group, Adani Transmission Step-One Ltd., and Adani Electricity Mumbai Ltd.
Moody's affirmed 'Ba3' rating for Adani Green Energy Ltd., 'Ba2' rating for Adani Green Energy Restricted Group, and 'Baa3' rating for Adani Transmission Step-One Ltd. and Adani Electricity Mumbai Ltd.
The agency retained 'stable' outlook for Adani Ports and Special Economic Zone Ltd., Adani International Container Terminal Pvt., Adani Green Energy Restricted Group and Adani Transmission Restricted Group 1.
Moody's affirmed 'Baa3' rating for Adani Ports and Special Economic Zone Ltd., Adani International Container Terminal Pvt. and Adani Transmission Restricted Group 1. It affirmed Ba1 rating for Adani Green Energy Restricted Group.
The rationale behind the outlook change for Adani Green Energy "considers the company's large capital spending program and dependence on sponsor support, potentially in the form of subordinated debt or shareholder loans, which will likely be less certain in the current environment", Moody's said.
The agency said the negative outlook also factors in the company's significant refinancing needs, of around $2.7 billion in the 2025 fiscal, and limited headroom in its credit metrics to manage any material increase in funding costs.
For Adani Green Energy Restricted Group, the change in outlook to 'negative' "factors in the refinancing risk associated with $500 million of bonds maturing in December 2024", Moody's said.
"Moody's recognises that the project finance structure of AGEL RG-1 provides protection from any contagion risk from the broader Adani Group."
Moody's said the change in outlook to 'negative' on Adani Transmission Step-One Ltd. considers the modest headroom in its parent Adani Transmission's credit metrics, relative to the minimum tolerance level under Moody's base case scenario.
This "limits the group's ability to withstand a material increase in funding cost or reduced funding access", the agency said.
The downgrade in outlook on Adani Electricity Mumbai "reflects the likely reduction in its funding access and reduced ability to manage any material increase in funding costs given the limited headroom in its credit metrics under Moody's base case scenario", the agency said.
"The stable outlook on Adani Ports and Special Economic Zone, Adani International Container Terminal, Adani Green Energy Restricted Group and Adani Transmission Restricted Group 1 further assumes that there will be no material adverse effect from any potential regulatory or legal investigations or increase in related party transactions to provide funding support to other group entities," Moody's said.
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