Adani Transmission, Adani Ports and Special Economic Zone exposed to heightened contagion risks: Fitch

U.S.-based Fitch held that the debt of Adani group’s rated Indian entities as of end-December 2022 was offshore and largely secured, with U.S. dollar bonds maturing only from mid-2024, suggesting no immediate concerns about repayment.
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Global ratings agency Fitch said two Adani Group companies viz. Adani Ports & SEZ Ltd. and Adani Transmission Ltd. were exposed to “heightened contagion risks,” possibly affecting their financial flexibility on account of weak governance in the group. 

Fitch, in the report released on Tuesday in Singapore, said Adani Transmission Ltd. and Adani Ports and Special Economic Zone Ltd. “would be capped at current rating level of ‘BBB-/Stable’ till the alleged concerns are ironed out.”

The U.S.-based credit rating agency held that the debt of Adani group’s rated Indian entities as of end-December 2022 was offshore and largely secured, with U.S. dollar bonds maturing only from mid-2024, suggesting no immediate concerns about repayment. 

According to its research on the group’s financials and cash flow, all rated entities or restricted groups would benefit from cash flow generation from January 2023 to March 2024. 

Fitch also highlighted that the contagion risk was lower for restricted groups.

Meanwhile, after two consecutive days of hammering at the bourses; the stocks of some Adani Group firms recovered on Wednesday with the flagship Adani Enterprises rising by 8.75% and Adani Port and SEZ Ltd. by 7.25%.

On Tuesday late night, the group came out with a statement terming reports of the group not completing repayment of $2.15 billion share-backed debt as “baseless and deliberately mischievous.”

In the statement, the group said that it had completed full prepayment of margin-linked share-backed financing aggregating to $2.15 billion and all corresponding shares pledged for those facilities have been released and the same would be reflected after March 31.