Credit Suisse Reportedly Assigns Zero Lending Value To Adani Group Bonds Following Hindenburg Allegations

Topline

Credit Suisse has assigned zero lending value for bonds issued by Adani Group’s listed subsidiaries, Bloomberg reported on Wednesday, a move that will deepen concerns for the beleaguered Indian conglomerate that has been accused of corporate fraud and stock manipulation by activist investor Hindenburg Research.

Key Facts

The Swiss investment bank has stopped accepting notes of Adani Group companies “as collateral for margin loans to its private banking clients,” the Bloomberg report said citing unnamed sources.

Bonds issued by three of Adani Group subsidiaries Adani Ports, Adani Green Energy and Adani Electricity Mumbai Ltd (a unit of Adani Transmission) have been assigned zero lending value by the bank—a move that could worsen the ongoing steep slide of the company’s notes.

The report also noted that several other lenders—two from Europe and one from Singapore—have continued to offer margin loans between 70-80% of the value of dollar-denominated bonds.

The report comes amid another crushing day for the group’s listed companies on the stock market, with shares in the flagship Adani Enterprises ending the day 28.2% in the red.

Credit Suisse declined to comment and the Adani Group has not responded to Forbes’ request for comment.

Adani Ports fell by 19.18% Wednesday, Adani Green Energy by 5.19% and Adani Transmission by 2.85%, while the group’s other major listed firms Adani Power, Adani Total Gas and food company Adani Wilmar ended the day 4.98%, 10% and 5% in the red, respectively.

Forbes Valuation

According to our estimates, founder Gautam Adani’s current net worth stands at $75.1 billion, after a market rout slashed $13.1 billion from his fortune on Wednesday. Adani is now ranked 15th on our list of the world’s richest people, down from 8th place on Tuesday and 3rd last week.

News Peg

Last week, a Forbes report highlighted how major Wall Street and European lenders—including J.P. Morgan, Bank of America Merrill Lynch, Credit Suisse, Barclays, Deutsche Bank and Standard Chartered Bank—helped the Adani Group raise billions through equity sales, refinancings and dollar bond offerings. The company raised nearly $10 billion between 2015 and 2021 through dollar bond sales underwritten by major U.S. and European investment banks. In addition to this, the conglomerate had about $27 billion in outstanding debt from bonds issued in Indian Rupees and other currencies as of May 2022. The Swiss lender is the first global financial institution that appears to have reacted to a series of allegations made against the Adani Group by activist investor Hindenburg Research last week.

Key Background

Hindenburg disclosed a short position against Adani last week and released a report accusing the Indian conglomerate of engaging in “brazen stock manipulation and accounting fraud scheme over the course of decades.” The company has vehemently denied the allegations calling them “maliciously mischievous” while also trying to frame it as a “calculated attack on India” and its economy.

Further Reading

Credit Suisse’s Wealth Unit Halts Margin Loans on Adani Debt (Bloomberg)

Behind The Adani Group’s ‘House Of Cards’: Juicy Fees For Wall Street Banks (Forbes)