Moody’s Investor Service on Friday downgraded ratings outlook of four Adani group firms including Adani Green Energy Ltd to ‘negative’ from ‘stable’, while keeping the ratings stable on these four companies. “These rating actions follow the significant and rapid decline in the market equity values of the Adani Group companies following the recent release of a report from a short-seller highlighting governance concerns in the Group,” Moody’s said in a statement. Further, Moody’s kept outlook and ratings stable on four other Adani group companies, including Adani Ports and Special Economic Zone Ltd.

List of affected Adani group companies:

Adani Green Energy Limited (AGEL):
– Ba3 ratings affirmed;
– Outlook changed to negative from stable

Adani Green Energy Restricted Group (AGEL RG-1) comprising Adani Green Energy (UP) Limited; Parampujya Solar Energy Private Limited; Prayatna Developers Private Limited
– Ba2 ratings affirmed
– Outlook changed to negative from stable

Adani Transmission Step-One Limited (ATSOL):
– Baa3 ratings affirmed
– Outlook changed to negative from stable

Adani Electricity Mumbai Limited (AEML):
– Baa3 ratings affirmed
– Outlook changed to negative from stable

Adani Ports and Special Economic Zone Limited (APSEZ)
– Baa3 ratings affirmed
– Outlook remains stable

Adani International Container Terminal Private Ltd (AICTPL)
– Baa3 ratings affirmed
– Outlook remains stable

Adani Green Energy Restricted Group (AGEL RG-2) comprising Wardha Solar (Maharashtra) Private Limited, Kodangal Solar Parks Private Limited and Adani Renewable Energy (Rj) Limited
– Ba1 ratings affirmed
– Outlook remains stable

Adani Transmission Restricted Group 1 (ATL RG1) comprising Barmer Power Transmission Service Limited; Raipur-Rajnandgaon-Warora Transmission Ltd; Sipat Transmission Limited; Thar Power Transmission Service Limited; Hadoti Power Transmission Service Limited; Chhattisgarh-WR Transmission Limited
– Baa3 ratings affirmed
– Outlook remains stable

The change in Adani Green Energy Ltd’s outlook to negative considers the company’s refinancing needs, huge capital spending program and dependence on sponsor support, potentially in the form of subordinated debt or shareholder loans, which will likely be less certain in the current environment. “The negative outlook also factors in the company’s significant refinancing needs of around $2.7 billion in the fiscal year ending March 2025 and limited headroom in its credit metrics to manage any material increase in funding costs,” the report said.

Moody’s considers Adani Ports and Special Economic Zone Ltd’s strong market position as the largest port developer and operator in India by cargo volume and its strong liquidity and financial profile. “Moody’s stable outlook reflects that APSEZ would continue to generate relatively steady cash flow over the next 12-18 months and would be able to realign its capital spending plans in the event of a liquidity squeeze,” Moody’s report added.

Moody’s decision to downgrade comes after Morgan Stanley Capital International (MSCI) cut the free-float designations of four Adani group companies, saying that it plans to reduce the weightage of these stocks, effective March 1.