Fitch Prepares to Downgrade Adani Bonds Amid Bribery Scandal | OilPrice.com

Fitch Ratings has put some of Adani Group’s bonds on watch in preparation for a potential downgrade amid a bribery scandal that shook one of India’s largest industrial conglomerates.

Last week, U.S. prosecutors and the Securities and Exchange Commission launched probes into the company on allegations Gautam Adani’s renewable energy arm had been giving bribes to local Indian government officials to secure solar power purchase contracts.

“As alleged, the defendants orchestrated an elaborate scheme to bribe Indian government officials to secure contracts worth billions of dollars and Gautam S. Adani, Sagar R. Adani, and Vneet S. Jaain lied about the bribery scheme as they sought to raise capital from U.S. and international investors,” stated Breon Peace, United States Attorney for the Eastern District of New York.

Since then, Kenya has canceled deals worth hundreds of millions of dollars with Adani’s companies and TotalEnergies has suspended any new investments in joint energy projects with Adani Group.

Now, Fitch is downgrading the company’s debt. Indeed, the ratings on senior unsecured dollar bonds issued by four Adani subsidiaries were downgraded to negative from stable because of the U.S. indictment, Reuters reported today.

The Fitch move follows a similar one by S&P Global Ratings, which on Friday downgraded three Adani Group companies, flipping its outlook for them to negative from stable.

According to the allegations made against the Indian billionaire, his nephew and several others, they had spent $265 million on bribes for local government officials to secure commitments for purchasing solar power from Adani Green Energy. The commitments would have generated estimated profits of about $2 billion over the next two decades.

Further allegations said that Adani and the rest of the group secured some $3 billion in funding from investors and bondholders for the advancement of their solar power plans without disclosing the bribery scheme.

By Irina Slav for Oilprice.com

More Top Reads From Oilprice.com