Following the indictment by US authorities of Gautam Adani and other officials S&P Global Ratings has revised to negative the outlook on Adani Electricity Mumbai, and Adani Ports and Special Economic Zone while affirming the ‘BBB-’ ratings on these entities.

The global rating agency that it revised outlook on Adani Green Energy Restricted Group 2 to negative, though it was ringfenced from the parent, Adani Green Energy, which was linked to the indictment. It said it affirmed the BB+ rating.

“The negative outlook on these entities indicates that, in our view, their cash flows could be materially affected if their funding access weakens, their funding costs rise significantly, or the allegations are proven, in addition to our assessment of their governance and business profiles,” it said.

A U.S. indictment of three board representatives of an unrated Adani group entity could affect investor confidence in other Adani group entities (because the founder is on the board of multiple entities within the group), thereby potentially impairing their funding access and increasing their funding costs, the rating agency said.

In our view, this could further raise questions regarding the management and governance of various Adani group entities, S&P said, adding the rider that the indictment is independent of, but follows, a short seller report that led to investigation by Indian Supreme Court and India’s capital market regulator.

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