Adani could find funding harder
Gautam Adani’s conglomerate could find it harder to get funding following a US arrest warrant for its billionaire founder, with some banks considering halting fresh credit to the Indian group due to an alleged $265 million bribery scheme.
Some global banks are considering temporarily halting fresh credit to the Adani Group after the US indictment but maintaining existing loans, sources told Reuters.
Ratings agency S&P warned in a statement that the group will need regular access to equity and debt markets given its large growth plans, but it might find fewer takers.
“We believe domestic, as well as some international banks and bond market investors, look at Adani entities as a group, and could set group limits on their exposure,” it said.
However, S&P added that the rated entities have “no immediate and lumpy” debt maturities.
Senior executives at two of Adani’s global lenders said that they have had multiple calls within their respective banks to discuss exposure to the group and what the impact of the indictment would be on its financial position.
Research firm CreditSights highlighted refinancing for the conglomerate’s green energy business, which is at the centre of the allegations, as its biggest near-term concern.
Bonds issued by the Adani Group dropped sharply for a second day on Friday and although the shares of some Adani firms clawed back some of Thursday’s losses, the overall market value of all 10 stocks has dropped by $27.9 billion over two sessions.
Adani Green Energy, which is at the centre of the US allegations, has lost nearly $7 billion of its value.
US authorities have charged Adani and seven other people with agreeing to pay bribes to Indian government officials to obtain contracts that could yield $2 billion of profit over 20 years as well as to develop India’s largest solar power project. Adani Group has said the accusations as well as those levelled by the US Securities and Exchange Commission in a parallel civil case are “baseless and denied” and that it will seek “all possible legal recourse”.
Credit risk seems contained: JPMorgan
Indian banks’ loan exposure to the embattled Adani Group seems “manageable” and any credit risk in the aftermath of its billionaire founder-chairman’s indictment in the United States looks “contained,” JPMorgan said on Friday. JPMorgan analysts said the banks’ exposure to the group was around 0.3% of outstanding loans as of March and that the loans were backed by asset cover.
