Fitch alters Azure Power bond outlook to negative

Fitch Ratings on Thursday revised its outlook on Azure Power Energy Ltd’s U.S. dollar bonds to ‘Negative’ from ‘Stable’, following the bribery and corruption investigation under the U.S. Foreign Corrupt Practices Act and the indictment of certain former board members and executives of Azure Power Global Limited (APGL) by the U.S. Securities and Exchange Commission and Department of Justice.

APGL, the holding company of Azure, has said it has been cooperating with the investigation, but Fitch flagged a refinancing risk for these bonds that are due August 2026 if there are further developments in the case.

“The charges and indictment do not cover APGL or its current board members or employees, but any charges or penalties could disrupt APGL’s funding plans and liquidity, including the refinancing of Azure RG3’s bullet maturity,” the rating major noted about Azure Power Energy Ltd.’s dollar bonds.

It affirmed the bonds’ rating at B, which reflects its view that the rating already captures the corporate governance risks relating the ongoing investigation. “APGL made necessary disclosures in January 2023 as well as in its subsequent filings and annual reports,” Fitch pointed out. Adani Green Energy Limited has been named in the same case as APGL.