Contagion risks loom over 2 Adani companies
Ratings agency Fitch on Tuesday said that two Adani Group subsidiaries are exposed to heightened contagion risks as a result of governance weakness at the conglomerate’s sponsor level, while affirming BBB- ratings to group entities.
Fitch said that Adani Transmission and Adani Ports and Special Economic Zone are prone to risks which could affect financial flexibility.
However, it added that the ratings of restricted groups would not be constrained at ‘BBB-’ at this stage if other factors driving their credit quality improve. In the note, Fitch highlighted that the contagion risk is lower for restricted groups.
The restricted group’s credit profile is supported by structural enhancements, such as a defined cash waterfall and limits on the incurrence of additional debt, the note said further.
The US-based credit rating agency opined that the debt of Adani group’s rated Indian entities as of end-December 2022 was offshore and largely secured, with US dollar bonds that will mature only from mid-2024. The liquidity position at all rated entities or restricted groups would benefit from cash flow gene ..
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