Gautam Adani Indicted: Moody's indicates negative credit impact for Adani Group

A development that has gathered significant attention is an indictment issued by US prosecutors against Gautam Adani along with seven others, including his nephew, Sagar Adani. Post this indictment, Moody's Ratings issued a statement stating that the credit status of the Adani Group had been negatively impacted. Moody's opines that the involvement of senior executives in such legal matters does not bode well for the governance standards and liquidity of the Adani Group.

The case has already had a major impact on Adani Group’s stock market performance. Two of its stocks plummeted by 20% in early trading, and the total market value of all 11 Adani stocks has dropped by Rs 2 lakh crore, now standing at Rs 12.3 lakh crore. This is the worst market performance for the group since the Hindenburg Report in early 2023, which also negatively affected the company’s financial standing.

Among the hardest hit is, of course, Adani Enterprises, down 20%, and Adani Energy Solutions that notched its lower circuit limit at 20%. Other group companies like Adani Ports, Adani Green, and Adani Power have fallen at least by 10%. The aftershocks went beyond equities. The bond markets also took a massive hit. Dollar bonds of Adani companies plummeted. Some fell by more than five cents in a dollar.

Moody's analysis emphasized that the ability of the Adani Group to raise capital will be tested in the wake of the growing allegations. The charges of bribery coupled with the group's connection to tax havens and massive debt burdened the investing firm, Adani bull GQG Partners. Commenting on the issue, the firm, closely watching the whole scenario, stated that it is reviewing the charges to decide appropriate actions to take in respect of its portfolios.

The indictment has resulted in a significant reduction in the share price of GQG Partners. Their shares dropped by 26% in the Australian exchange. It remains to be seen how this whole debacle plays out regarding the financial future of the Adani Group.

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