The Adani group is unlikely to face any problems in repaying its bondholders in both domestic and international markets, thanks to good cash flows and ratings on the group’s assets, experts told Moneycontrol on 7 February.
“All the bonds issued by the operating companies have good cash flows, with growth and scalability,” said Ajay Manglunia, Managing Director, JM Financial. “(Therefore) I do not see an issue in meeting their obligations on time as outstanding debt is low,” Manglunia added.
“They is no liquidity crunch and assets are also good because of AA and above ratings,” said another fund manager at with a Mumbai-based private firm on condition of anonymity.
The Adani group has redemptions due to the tune of Rs 90,000 crore in the next few years, which includes overseas bonds and commercial paper (CP), according to Prime database.
The Adani group is in the midst of a crisis after US-based short-seller Hindenburg Research alleged irregularities in its books on January 24. This led to a sharp fall in the share prices of various companies of the group.
But, some fund managers still remain cautious.
“If any rating action happens in the domestic market on any of the group companies, then it will be a concern for the whole market and may lead to a domino effect,” a fund manager with a large fund house based in Mumbai said. He too declined to be named.
S&P Global Ratings, on Friday, revised the outlook on Adani Ports and Adani Power to negative from stable while affirming the rating.
“This is likely to make investors and lenders cautious initially, till full clarity emerges. Major infrastructure sectors like ports and electricity have wider impact, and as a result more clarity is required on financial issues with requisite funding support in order to avoid any domino effect on other companies,” said Jyoti Prakash Gadia, Managing Director at Resurgent India, a Category 1 merchant bank.
Earlier, global brokerage CLSA had said that the refinancing risk for Adani group dollar bonds is low in the near term, as redemptions of such bonds are not sizeable.
Also read: How big or small is the trouble from Adani for bond markets? Ratings may decide
“As per our analysis, none of the group’s $7 billion in FC (foreign currency) bonds mature within the next 18 months. Some $1.9 billion mature in the 2HCY24 (18-24 months from now),” CLSA said in its report.
The report further added that Adani Ports, Adani Transmission and Adani Green together have outstanding $7 billion worth of overseas bonds. About 50 percent of these bonds mature beyond calendar 2028, the report said.
Redemption numbers
Of the Rs 90,000 crore coming up for redemption, approximately Rs 65,000 crore constitute overseas bonds, and over Rs 5,000 crore in CP.
The remaining chunk worth around Rs 25,438 crore constitutes domestic bonds.
Data showed that, in the domestic market, Rs 6,924 crore is due for redemptions in 2023, Rs 1,922 crore due in 2024, Rs 1,672 crore in 2026, and Rs 2,600 crore in 2027.
Adani Ports & Special Economic Zone Ltd has highest redemption worth Rs 47,798.75 crore, including overseas bonds and CP. This is followed by Adani Green Energy worth Rs 5,702 crore, and Adani Enterprises Ltd worth Rs 5,702 crore.
Also read: Adani Ports aims to repay Rs 5,000 crore in debt by the end of 2023-24: Karan Adani
On January 24, US-based short-seller Hindenburg Research alleged irregularities in Adani group’s books, which led to a sharp fall in the share prices of the group companies.
Post this, the group had to withdraw a planned follow-on public offering (FPO) and some foreign banks stopped accepting Adani group’s bonds as collateral for margin loans.
Lenders to Adani group faced questions on the future of their loans and their repayment status. Five banks, including some of the biggest public and private sector players, have so far disclosed their exposure to the Adani Group.
These banks are State Bank of India, Bank of Baroda, Punjab National Bank, Axis Bank and IndusInd Bank.
Post announcement of the Union Budget, Union Finance Minister Nirmala Sitharaman, in an interview to Network18, clarified that the exposure of Life Insurance Corporation of India (LIC) is well within the permissible limits.
In a post-Budget press conference in Mumbai on February 4, she said that the regulators are closely monitoring the situation at Adani Group companies.
