Sebi Asks Rating Agencies For Information On Loans And Securities Issued By Adani Group Companies.
Hindenburg report likely cannot constitute a significant event for any rating action because it has been almost a month since it was released.
Sebi asks rating agencies for information on loans and securities issued by Adani Group companies. According to the sources, the Securities and Exchange Board of India (Sebi) has requested information from credit rating agencies about all ratings of local loans and securities issued by Adani Group entities.
Rating companies were ordered to disclose information by the Indian capital markets regulator, including all current ratings, outlooks, and potential updates from any conversations with representatives of the business group.
“Sebi is probably seeking to determine whether the dramatic drop in the stock prices of several Adani entities has any influence on the borrowing companies’ cash balances and ability to repay their obligations.Yet, the vast bulk of this data is freely accessible to the public. A person with knowledge of the regulator’s communication was kept informed.
Notwithstanding stock price reductions at Adani Total Gas, Adani Green Energy, and Adani Transmission ranging from 21.7 to 77.47 percent, none of the Indian rating agencies have changed their ratings or outlooks for the 10 Adani-listed companies.
The rout was allegedly sparked by Wall Street short-seller Hindenburg Research, who said that the firm was participating in accounting fraud and pricing manipulation. A significant drop in share price is one of the “material events” that rating agencies frequently consider when evaluating a borrower’s rating and outlook or putting it on “rating watch.”
“The Hindenburg report likely cannot constitute a significant event for any rating action because it has been almost a month since it was released. In such cases, rating agencies would “monitor additional factors, such as a further decline in the share price or other events before taking any action,” according to a banker.
Only global credit ratings agencies like S&P and Moody’s have so far modified the outlook on several Adani firms from “stable” to “negative,” mostly because of the quick decrease in the companies’ market values. Local organizations think the group could look over some of its capital investments.
On February 20, as negative pressure on the stocks increased, the MC A10 index, which tracks the performance of the Adani Group’s stocks, ended the day much down. Adani Enterprises, Adani Green Energy, Adani Total Gas, and Adani Transmission were big contributors to the index’s decline (5.36 percent to 35.37). They each suffered losses of 5% to 7%. The index monitors the current price movement of the 10 equities that make up the Adani Group. Based on their market value, the various enterprises in A10 are given varying weights.
In a press statement on February 18, index provider FTSE Russell stated that it has been keeping tabs on information regarding the equities of the Adani Group and will move forward with the planned index review revisions for the securities.
How much has the Adani Group repaid in debt since January 2023?
Adani Group has been prepaying its debt to restore investor confidence in the wake of a critical report from a US short seller. The most recent prepayment was made by Adani Ports, which repaid Rs 1,000 crore in short-term debt. After experiencing significant stock selloffs following the publication of Hindenburg Research’s research accusing the company of blatant stock manipulation and accounting fraud schemes over decades, the Adani Group’s financial stability has come under scrutiny.
Since January 24, 2023, the day Hindenburg published its report, the company has repaid loans secured against pledged shares totaling $1.114 billion, or Rs 9,200 crore, or all share-backed financing. Moreover, Adani Ports and Special Economic Zone (APSEZ) paid Rs 1,000 crore in commercial paper (CP) to SBI Mutual Fund.
Large payback liabilities totaling more than $2 billion are due to be paid by group chairman Gautam Adani between January 2023 and March 2024. As of September 30 and until last week, the company had a net debt balance of $24.1 billion.
The company has been using cash on hand and earnings from operations to pay off its short-term debt. To maintain the confidence of investors and avoid further damage to the group’s reputation, debt repayment has been planned as a recovery strategy.
Adani Ports and the Special Economic Zone
Adani Ports and Special Economic Zone (APSEZ) made a loan payment of Rs 1,000 crore to SBI Mutual Funds on February 20 in the form of a commercial paper (CP). A short-term debt of Rs 1,000 crore in commercial papers that is due in a month will also be prepaid by the corporation. An APSEZ representative added, “This half prepayment comes from the current cash balance and revenues produced from the company’s activities. This demonstrates the trust that the market has in the group’s conservative capital and liquidity management plan.
Adani Ports had stated that it will make an effort to pay down a debt of around Rs 5,000 crore in the year beginning in April to reduce its existing net debt to earnings before interest, taxes, depreciation, and amortization ratio from slightly over 3 times to roughly 2.5 times.
The commercial paper issued by Adani Enterprises is due to expire in February or March, while another Rs 2,000 crore is redeemable between April and January 2024. They will probably find a home as they develop.
Adani Green Energy Ltd. and Adani Transmission Ltd. The organization argued that the companies have enough cash reserves to pay off debt commitments and that there are no impending significant debt maturities in the short or medium term that pose a danger of refinancing. The group’s cash reserve climbed by 6.4% to Rs 31,646 crore at the end of December 2022, according to Q3 data compared to Q2 2022–23.
The organization paid off $1.11 billion in loans on February 6 and gained the release of the pledged shares before to the loans’ scheduled expiration in September 2024, according to a company statement. These businesses were Adani Green Energy Ltd., Adani Ports, and Adani Transmission Ltd.168.27 million Adani Ports and Special Economic Zones shares, or 12% of the promoter’s stake, would be released as a result of the pre-payment.
A total of 27.56 million shares, or 3% of the promoter’s ownership, will be allocated to Adani Green. Moreover, 11.77 million Adani Transmission shares, or 1.4% of the promoter’s interest, would be forfeited.
The Adani Group intends to repay a $500 million loan to a group of banks that includes Barclays, Standard Chartered, and Deutsche Bank, which is due next month. According to sources, the corporation is still in talks with international bond investors about repaying $500 million in foreign loans secured by promoter shares in various group companies.
Data shows that the business has received loans from overseas banks as well as $8 billion in recent years from foreign bond purchasers. Adani Green Energy Ltd. and Adani Ports and Special Economic Zone Ltd. are two examples of Adani Group firms for whom rating agencies Moody’s and S&P have updated their outlook. The market value of the Adani Group enterprises had decreased by over 57% as of February 21. From Rs 19.2 lakh crore on January 24, the total market value of 10 Adani-controlled firm stocks fell to Rs 8.2 lakh crore.