JPMorgan has reiterated its ratings on Adani Group's dollar bonds as it expects no material financial impact of the U.S. investigation into potential bribery by the group entity.
U.S. Attorney and U.S. Justice Department has lodged a probe in to Adani Group entity, most likely Adani Green Energy Ltd., under the U.S. Foreign Corrupt Practices Act to search for potential bribery, JPMorgan said in a note.
JPMorgan's Ratings On Adani Group's Dollar Bonds
'Overweight' across all bonds on Adani Ports & Special Economic Zones Ltd.
'Overweight' on Adani Transmission Ltd. 2026 and 2036 note
'Underweight' on Adani Green Energy Ltd 2042 note
'Neutral' on Adani Renewable Energy RJ Ltd. 2039 note
'Neutral' on Adani Enterprises Ltd. dollar bonds
'Neutral' on Adani Electricity Mumbai Ltd. dollar bonds
Reasons Behind JPMorgan's View
Details about the case are scarce, which will result in no potential prosecution.
Based on the details, JPMorgan assumed the prosecution could be related to the 12 GW manufacturing-linked solar energy project, which was signed by Adani Green Energy Ltd. and Azure Power with Solar Energy Corp. of India. However, this project isn't linked to any restricted group bonds from either company.
Estimating anti-bribery provisions under the U.S. FCPA, the brokerage believes there will be no material impact on the company's finances.
JPMorgan said the scope of significant corruption is unlikely if the high transparency of renewable energy tenders in India is taken into account.
Adani Ports & Special Economic Zones Ltd. has managed to get a $553 million loan from its Colombo Port Project from the U.S. Government's Development Financial Arm, which can indicate the company has adhered to diligent practices.
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