Gautam Adani's Indian conglomerate could face a funding squeeze after a U.S. arrest warrant for its billionaire founder over an alleged $265 million bribery scheme, credit analysts said, with some banks considering halting fresh credit to the group.

Bonds issued by the Adani Group dropped sharply for a second day on Friday, although some of its shares stabilised after steep losses the previous day following news of the warrant.

Some global banks are considering temporarily halting fresh credit to the Adani Group but maintaining existing loans after the U.S. indictment, sources told Reuters.

Senior executives at two of Adani's global lenders said that they have had multiple calls within their respective banks to discuss exposure to the group and what the impact of the indictment would be on its financial position.

Research firm CreditSights highlighted refinancing for the conglomerate's green energy business, which is at the centre of the allegations, as its biggest near-term concern.

Ratings agency S&P also warned in a statement that the group will need regular access to equity and debt markets given its large growth plans, but it might find fewer takers.

"We believe domestic, as well as some international banks and bond market investors, look at Adani entities as a group, and could set group limits on their exposure," it said.

U.S. prosecutors have charged Adani and seven other people with agreeing to pay bribes to Indian government officials to obtain contracts that could yield $2 billion of profit over 20 years as well as to develop India's largest solar power project.

Adani Group has said the accusations as well as those levelled by the U.S. Securities and Exchange Commission in a parallel civil case are "baseless and denied" and that it will seek "all possible legal recourse".

Some analysts said the fallout was unlikely to be limited to the Adani group of companies.

"India's renewable energy sector, a critical pillar for global climate goals, may face reduced international investment as a result of this controversy," said Nimish Maheshwari, an independent analyst who publishes on Smartkarma.

"Investors may demand greater transparency and due diligence, slowing down the pace of project financing."

The Securities and Exchange Board of India, the country's market regulator, is making preliminary checks to see if disclosures made by Adani entities were inadequate and if they breached local market regulations, a SEBI official told Reuters.

SEBI did not respond to a request for comment.

The regulator has completed a separate investigation into the group, but not yet issued orders, after Hindenburg Research in January 2023 alleged improper use of tax havens and stock manipulation, which the group has denied.

Falls in Adani dollar bond prices on Friday included a 2.5c drop on the dollar for 2029 Adani Ports and Special Economic Zone bonds. At 87.8c, they are down more than 5c over the two sessions.

Longer-dated maturities have fallen around 5c in two days and trade just below 80c.

Adani Transmission and Adani Electricity Mumbai bond prices had similar declines.

Although the shares of some Adani firms clawed back some of Thursday's losses, the stocks have seen their combined market value drop by $26 billion.

Investors are also watching to see if more Adani deals could be scuttled after Kenya cancelled a procurement process worth nearly $2 billion that had been widely expected to award control of the country's main airport to the group.

It also nixed a 30-year, $736-million public-private partnership deal that an Adani Group firm signed with the energy ministry last month to construct power transmission lines.

Adani Green Energy also cancelled a scheduled $600 million U.S. bond sale.

U.S. prosecutors say Adani, his nephew Sagar Adani and others bribed Indian officials to gain business advantages in renewable energy projects in India that benefited Adani Green and a company called Azure Power, which was listed on the New York Stock Exchange until late 2023.

They are also accused of making misleading statements to the public, including U.S. investors, despite being made aware of the U.S. investigation in 2023.

Adani has not appeared in public or commented on social media since the indictment and his whereabouts remain unclear.

Indian authorities have not responded to opposition calls for a probe into the indictment, which came not long after Adani raised $1.5 billion through two share sales by flagship firm Adani Enterprises and power distribution arm Adani Energy Solutions.

(Reporting by Scott Murdoch and Tom Westbrook; Additional reporting by Chris Thomas, Ira Dugal, Aditya Kalra and Krishna Das; Editing by Edwina Gibbs and Alexander Smith)