Moody's changes outlook on Adani Group companies to negative

International ratings agencies Moody's Ratings has affirmed the ratings of seven Adani Group companies but has changed the outlook for all seven from stable to negative.

The companies affected are:

1. Adani Green Energy Limited Restricted Group (AGEL RG-1): Ba1 ratings affirmed; outlook changed to negative. This group includes Adani Green Energy (UP) Limited, Parampujya Solar Energy Private Limited, and Prayatna Developers Private Limited.

2. Adani Green Energy Limited Restricted Group (AGEL RG-2): Ba1 ratings affirmed; outlook changed to negative. This group includes Wardha Solar (Maharashtra) Private Limited, Kodangal Solar Parks Private Limited, and Adani Renewable Energy (Rj) Limited.

3. Adani Transmission Step-One Limited (ATSOL): Baa3 ratings affirmed; outlook changed to negative.

4. Adani Transmission Restricted Group 1 (AESL RG1): Baa3 ratings affirmed; outlook changed to negative. This group includes Barmer Power Transmission Service Limited, Raipur-Rajnandgaon-Warora Transmission Ltd, Sipat Transmission Limited, Thar Power Transmission Service Limited, Hadoti Power Transmission Service Limited, and Chhattisgarh-WR Transmission Limited.

5. Adani Electricity Mumbai Limited (AEML): Baa3 ratings affirmed; outlook changed to negative.

6. Adani Ports and Special Economic Zone Limited (APSEZ): Baa3 ratings affirmed; outlook changed to negative.

7. Adani International Container Terminal Private Ltd (AICTPL): Baa3 ratings affirmed; outlook changed to negative.

These rating actions follow the indictment of Adani Green Energy Ltd's chairman Gautam Adani and several senior executives by the US Attorney's Office in a criminal case, along with charges filed by the US Securities and Exchange Commission (SEC) in a civil case.

The allegations include bribery of Indian government officials, securities and wire fraud, conspiracy to violate the US Foreign Corrupt Practices Act, obstruction of justice, and making false statements in annual reports and to the US government.

Moody's change to a negative outlook reflects concerns that these charges could weaken the Adani Group's access to funding and increase capital costs. Additionally, the action highlights potential weaknesses in governance structures and the risk of operational disruptions during ongoing legal proceedings.

Despite the charges focusing on AGEL's chairman and senior executives, Moody's believes there could be a broader impact on all rated Adani Group entities due to Gautam Adani's role as chairman and controlling shareholder of these companies.

Project finance entities within the group are not at refinancing risk and do not need substantial capital investment. However, they are still vulnerable to governance issues and potential risks from negative legal findings.