By Scott Murdoch and Tom Westbrook
(Reuters) -Gautam Adani’s conglomerate could find it harder to get financing after a U.S. arrest warrant for the billionaire founder, with some banks considering halting new lending to the Indian group over an alleged $265 million bribery scheme .
Some global banks are considering temporarily halting new lending to Adani Group after the U.S. indictment but keeping existing loans, sources told Reuters.
Credit rating agency S&P warned in a statement that the group will need regular access to the equity and debt markets because of its major growth plans, but there may be fewer takers.
“We believe that both domestic and some international banks and bond market investors view Adani entities as a group and may impose group limits on their exposure,” the report said.
However, S&P added that the rated entities have “no immediate and lumpy” debt.
Senior executives at two of Adani’s global lenders said they have had multiple calls within their respective banks to discuss its exposure to the group and what the impact of the charges would be on its financial position.
Research firm CreditSights highlighted the refinancing of the conglomerate’s green energy business, which is at the center of the allegations, as the biggest near-term concern.
Bonds issued by the Adani Group fell sharply for a second day on Friday and while shares of some Adani companies recovered some of Thursday’s losses, the total market value of all ten stocks fell by $27.9 billion in two sessions.
Adani Green Energy (NS:), which is at the center of the US accusations, has lost almost $7 billion in value.
U.S. authorities have accused Adani and seven other people of paying bribes to Indian government officials to obtain contracts that could generate $2 billion in profits over 20 years and develop India’s largest solar energy project.
Adani Group has said the allegations, as well as those made by the US Securities and Exchange Commission in a parallel civil case, are “baseless and denied” and that it will “take all appropriate legal action”.
Some analysts said it was unlikely the impact would be limited to the Adani group of companies.
“India’s renewable energy sector, a crucial pillar for global climate goals, may see reduced international investment as a result of this controversy,” said Nimish Maheshwari, an independent analyst publishing on Smartkarma.
“Investors may demand greater transparency and due diligence, slowing the pace of project financing.”
The Securities and Exchange Board of India, the country’s market regulator, is conducting preliminary checks to see if Adani entities’ disclosures were inadequate and whether they violated local market rules, a SEBI official told Reuters.
SEBI did not respond to a request for comment.
The regulator has completed a separate investigation into the group, but has not yet issued orders, after Hindenburg Research alleged improper use of tax havens and stock manipulation in January 2023, which the group has denied.
Friday’s fall in Adani dollar bond prices included a 2.5 cent drop on the dollar for Adani Ports and Special Economic Zone bonds for 2029. At 87.8c, they are up from 5c over the two sessions decreased.
Longer maturities have fallen around 5 cents in two days and are trading just below 80 cents.
The bond prices of Adani Transmission and Adani Mumbai saw a similar decline.
Investors are also watching to see if more Adani deals could be scrapped after Kenya canceled a nearly $2 billion tender process that was widely expected to award control of the country’s main airport to the group.
It also ended a 30-year, $736 million public-private partnership agreement that an Adani Group company signed with the Energy Ministry last month to build power transmission lines.
Adani Green also canceled a planned $600 million US bond sale.
U.S. prosecutors say Adani, his cousin Sagar Adani and others bribed Indian officials to gain business benefits from renewable energy projects in India, benefiting Adani Green and a company called Azure Power, which was listed on the New York Stock Exchange until late 2023 noted.
They are also accused of making misleading statements to the public, including US investors, despite being notified of the US investigation in 2023.
Adani has not appeared in public or commented on social media since the indictment and his whereabouts remain unclear.
Indian authorities have not responded to opposition calls for an investigation into the charges, which came not long after Adani raised $1.5 billion through two share sales by the flagship company. Adani Enterprises (NS:) and power distribution branch Adani Energy Solutions.
