Adani bonds hit one-year low as investors weigh US bribery allegations

The group's chairman and seven other people were charged with agreeing to pay about $265m in bribes to Indian officials

The Adani group owned Mundra Port in Mundra. Longer-dated ports bonds were down on Monday and have lost between 8 cents and 10 cents in face value on the bribery news. AFP

Adani dollar bond prices fell on Monday to almost one-year lows, as investors cut their exposure to the Indian conglomerate and some bankers considered pausing fresh lending in the wake of bribery and fraud accusations by US authorities.

The group's billionaire chairman, Gautam Adani, and seven other people were last week charged with agreeing to pay about $265 million in bribes to Indian government officials.

The charges related to alleged payments to obtain contracts that could yield $2 billion of profit over 20 years as well as to develop India's largest solar power project.

The charges also included making misleading statements to the public despite being made aware of the US investigation last year.

The Adani Group has said the accusations as well as those levelled by the US Securities and Exchange Commission in a parallel civil case are baseless and that it will seek “all possible legal recourse”.

Banks and regulators have been reviewing exposure to the ports-to-power conglomerate in the wake of the charges.

The Singapore banking sector's overall exposure to the Adani Group is small, the Monetary Authority of Singapore said on Monday.

“Banks have in place measures to review and manage their exposures to borrowers and counterparties,” an MAS official said.

DBS Group, Singapore's biggest bank by assets, had said last year that its exposure to the Adani Group was S$1.3 billion ($967 million). DBS declined to comment in response to a request from Reuters.

Some global banks are considering temporarily halting fresh credit to the company after the US indictment but maintaining existing loans, according to several bankers spoken to by Reuters, raising questions about its access to future funding.

“In the near term, the US indictment is likely to constrain the group’s access to financing, particularly in the offshore market,” a Lucror Analytics note published on Smartkarma said.

Cash balances of Adani portfolio companies stood at $6.33 billion as of the first half of the current fiscal year ending March next year, the company said.

The cash balances exceed long-term debt repayments for the next 28 months, Adani said in a presentation on the credit and financial performance of its group companies, which it regularly shares after its quarterly results.

The crisis is the second in two years to hit the Adani group, which was last year accused by short-seller Hindenburg Research of improperly using offshore tax havens. The company denied those claims.

In Asian trade on Monday, some of the most liquid debts, issued by Adani Ports and Special Economic Zone fell between 1 cent and 2 cents, with similar selling in Adani Transmission debt.

Ports bonds maturing in 2027 were down 1.6 cent to 88.98 cents on the dollar, having lost about 7 cents in face value since US prosecutors issued the charges last week.

Longer-dated Ports bonds were down on Monday and have lost between 8 cents and 10 cents in face value on the news.

Adani Transmission debt maturing in May 2036 fell 1.8 cent on Monday for a loss of more than 7 cents since Wednesday.

Adani group's 10 listed stocks led by Adani Enterprises lost $27.9 billion in market value over two sessions last week after the US charges.

The stocks regained some lost ground on Monday, as Adani Energy Solutions rose 6 per cent, while Adani Green Energy rose 4 per cent in early trade.