Indian banks’ exposure to Adani group is not big enough to pose a substantial risk to their credit profiles, global rating agencies Fitch Ratings and Moody’s said on Tuesday.
“We believe loans to all Adani group entities generally account for 0.8-1.2 per cent of total lending for Fitch-rated Indian banks equivalent to 7-13 per cent of total equity. Even in a distress scenario, it is unlikely that all of this exposure would be written down, as much of it is tied to performing projects,” said Fitch.
“Fitch Ratings believes that Indian banks’ exposure to the Adani group is insufficient in itself to present a substantial risk to the banks’ standalone credit profiles,” the rating agency said in a note.
Moody’s said, “While we estimate that the exposures are larger for public sector banks than for private sector banks, they are smaller than 1 per cent of total loans for most banks. Risks for banks can increase if Adani becomes more reliant on bank loans.”
“We estimate that the bulk of the exposures is collateralised, either with operational assets or with projects under execution, rather than to the corporate level,” it said.
APSEZ to repay
Meanwhile, Adani Ports and Special Economic Zone is planning to repay ₹5,000 crore in debt by the next financial year 2023-25, informed the company’s whole-time director and Chief Executive Officer Karan Adani in a statement on Tuesday.
“We are considering total loan repayment and prepayment of around ₹5,000 crore, which will significantly improve our net debt-to-Ebitda ratio and bring it closer to 2.5x by March 2024,” Adani in the video message.
On Monday, Adani group Adani group said it is looking to prepay its debt of ₹7,000-8,000 crore from its loans against shares (LAS) portfolio to allay fears.