In a boost to Adani Energy Solutions Limited (AESL), Fitch Ratings has upgraded the company's credit rating at 'BBB-' from its 'Ratings Watch Negative' list. This is the first upgrade by the international ratings agency since the US indictment of certain board members of its another group entity, Adani Green Energy Limited (AGEL) in November 2024. It means AESL is considered financially healthy and capable of repaying its debts. However, the ratings agency has assigned a "Negative Outlook" to AESL, indicating that there are still some potential risks on the horizon.
“We believe the risks associated with the group's liquidity and funding requirements have moderated. However, the Outlook is Negative to reflect our view that the proceedings and outcome of the US investigations could reveal that the group's corporate governance practices are weaker than we expected and lead to negative rating action in the near to medium term,” said the rating agency.
The rating agency said that it assesses that the indictment for alleged securities and wire fraud reflects a corporate governance risk for AESL. A conviction or any indication of weaknesses in Adani group entities' governance practices and internal controls that may come to light as part of the process could put pressure on the ratings. As per the rating agency, the company has demonstrated adequate funding access since the US indictment, having drawn Rs. 51 billion from onshore and offshore banking facilities. The group company, AGEL, has also raised onshore funding to refinance its $1.1 billion construction-linked facility, which was due in March 2025. Fitch said that the Outlook could be revised to Stable if risks of any material negative implications from US investigations do not materialise, while funding access remains intact.