Fitch Ratings has placed a negative outlook on Adani Energy Solutions Limited, citing concerns over corporate governance and the ongoing U.S. investigations into the company. The move follows accusations against Adani Group executives, including billionaire Gautam Adani, of bribing officials for Indian power contracts and misleading U.S. investors during fundraising activities. Despite these accusations being dismissed by the Adani Group as “baseless,” Fitch remains cautious about the potential impact on the company’s financial health.
The U.S. investigations could lead to regulatory penalties, restrictions, or a loss of investor confidence, which could ultimately result in a downgrade of the company’s rating. Fitch expressed that any adverse findings from the probes could weaken the company’s governance standards, affecting its creditworthiness in the near to medium term. However, the ratings agency removed the company from its ‘rating watch negative’ list, suggesting a less immediate concern over liquidity and funding risks.
Despite its independent operations, Adani Energy is still affected by governance issues at the broader Adani Group level. Fitch noted that these governance concerns could impact the company’s access to capital markets and overall liquidity, thereby influencing its financial stability. The ongoing legal scrutiny adds uncertainty to the company’s long-term outlook, prompting further caution from investors.
Fitch has affirmed Adani Energy’s Long-Term Foreign- and Local-Currency Issuer Default Ratings at ‘BBB-‘, signaling that the company maintains a stable financial footing despite the governance concerns. However, any negative developments stemming from the U.S. investigations could alter this standing in the future, emphasizing the importance of closely monitoring the situation.
SOURCE: REUTERS