The yield on the Adani Group’s dollar bonds eased by up to 500 basis points (bps) in the last two weeks after the company paid back loans prior to the redemption date, dealers said.
According to Bloomberg data, yield on the overseas bonds of Adani Electricity Mumbai Infra fell to 8.7614 percent on March 13, from 9.4626 percent on February 28. Adani Green Energy’s bond yield fell to 12.72 percent from 18.3702 percent.
Bond yields of Adani Ports & Special Economic Zone and Adani International Container Terminal fell to 8.871 percent and 6.857 percent, respectively, from 9.586 percent and 7.0388 percent earlier.
“The yield on Adani dollar bonds have eased in the last few days because of the measures taken by the group by early prepayment of loans, which has given some comfort to investors,” said Kranthi Bathini - Equity Strategist, WealthMills Securities Pvt Ltd.
Boosting investor confidence
Investor confidence improved in the last few days after the Adani Group announced fully prepaid share-backed promoter financing and share-backed financing, and completed a secondary equity transaction with GQG Partners.
On March 12, Adani completed the full prepayment of margin-linked share-backed financing aggregating to $2.15 billion, well before the committed timeline of 31 March 2023, the company said in a statement.
Further, promoters have also prepaid a $500-million facility taken for financing the Ambuja acquisition.
This was in line with the promoters’ commitment to increasing the equity contribution, and promoters have now infused $2.6 billion out of the total acquisition value of $6.6 billion for Ambuja and ACC.
On March 7, the company said that it has prepaid share-backed financing of Rs 7,374 crore ($902 million) ahead of its maturity in April 2025.
Also read: Does RBI have a case for pause in April?
Yield movement since Hindenburg report
The yield on these bonds have risen sharply since the Hindenburg Research report flagged concerns over the group’s high debt level and accounting irregularities.
On January 24, US-based short-seller Hindenburg Research released a report alleging that the Adani Group improperly used offshore tax havens and manipulated stock prices.
It said there were also concerns over the group’s high debt levels.
Hindenburg said it had taken a short position in Adani Group companies through US-traded bonds and non-Indian-traded derivative instruments.
The Adani Group called the Hindenburg report an attack on India and its independent institutions. It said the report was “baseless” and “driven by an ulterior motive to create a false market”.
Also read: Indian bond yield eases tracking fall in US yields
Way forward
Dealers expect that the yield on these bonds may fall further if the company repays the loans or redeems their upcoming bonds on time.
“The yields may fall further if the Adani Group keeps giving comfort to investors by repaying their loans on time or before time,” Bathini added.
However, some dealers said it is difficult to guess the movement in yields on Adani group bonds.
“A few early redemptions or prepayment of loans will not decide the future movement of yields on these bonds,” said a dealer on condition of anonymity.
