In another blow to Adani Group, S&P Global Ratings on Friday said it has revised the rating outlook for Adani Electricity Mumbai and Adani Ports to ‘negative’ from ‘stable’, on concerns of increased cost of capital and reduced funding access. This is the first rating action by a global rating agency after Hindenburg Research published a report, which had several adverse observations.
“There is a risk that investor concerns about the group’s governance and disclosures are larger than we have currently factored into our ratings, or that new investigations and negative market sentiment may lead to increased cost of capital and reduce funding access for rated entities,” said S&P.
Earlier in the day, S&P Dow Jones Indices announced that it would remove Adani Enterprises from its widely used sustainability indices with effect from February 7. “Adani Enterprises will be removed from the Dow Jones Sustainability Indices following a media and stakeholder analysis triggered by allegations of stock manipulation and accounting fraud,” said the announcement.
Within hours, Moody’s Investors Service put out a note stating that adverse developments are likely to reduce Adani group’s ability to raise capital to fund committed capex or refinance maturing debt over the next 1-2 years.
Meanwhile, both the Centre and the Reserve Bank of India stepped in to assuage concerns over the possibility of a contagion effect arising out of the developments around the group. Finance Minister Nirmala Sitharaman said the country’s markets were well-regulated. “One instance, however much talked about globally, I would think is not going to be indicative of how well Indian financial markets have been governed,” said Sitharaman.
The RBI said the banking sector remains resilient and stable in the backdrop of reports about Indian banks’ exposure to Adani group even as the chiefs of top public sector banks stated that their exposure to the conglomerate is well within regulatory limits.
Shares of Adani group rose on Friday after the worst ever fall in the past few days. Adani Enterprises gained 1.25 per cent, Adani Ports and Special Economic Zone rose by 7.98 per cent and Adani Power closed lower by 5 per cent.