Adani Ports to issue bonds to raise Rs 500 crore on January 8

Adani Ports_

Adani Ports and Special Economic Zone plans to issue bonds next week to raise Rs 500 crore, market sources said.

Adani Ports will issue two bonds worth Rs 250 crore each on January 8, maturing in five years and 10 years, with a fixed coupon of 8.70 percent and 8.80 percent, respectively.

This marks the Adani Group’s second bond issue after the Hindenburg Research report surfaced in January last year. Before this, Adani Capital had raised Rs 100 crore in November.

Hindenburg, a US short seller, had alleged accounting fraud and stock manipulation by the group. The report resulted in a $150 billion loss in the group’s market capitalisation and hurt its ability to raise funds.

The group’s market cap has since recovered some ground and was boosted after the Supreme Court this week declined to intervene in the regulator’s investigations into the allegations raised by Hindenburg Research.

“Adani Group companies are tapping the bond market with small issue sizes because the company wants to test the market,” a money market expert said.

The bonds have been rated 'AA+' by India Ratings and ICRA. The pay-in date – when the exchange of bonds and money takes place between the issuer and the investor – is January 9.

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Interest rate

The company said on a downgrade of ratings to ‘AA-’ or any other equivalent rating, the interest rate applicable on the bonds would be increased by 0.50 percent per annum and for every notch downgrade thereafter, the interest rate would be increased by 0.25 percent per annum.

It said for every level of upgrade in the credit rating of the debentures after such a downgrade, the interest rate would be decreased by 0.25 percent per annum.

The board of directors of Adani Ports on January 3 approved raising funds of as much as Rs 5,000 crore via non-convertible debentures of face value of Rs 1,000 each through one or more tranches.

The company operates 13 ports and terminals in India, including its largest container handling port, Mundra in Gujarat.

Adani Group companies are raising funds for capital expenditure and have plans to spend Rs 7 lakh crore over the next decade on infrastructure projects.

On January 3, the Supreme Court dismissed pleas seeking the transfer of a probe into alleged violations of securities laws by Adani Group companies to a special investigation team or the Central Bureau of Investigation. The court asked the market regulator, the Securities and Exchange Board of India, to complete the remaining two of the 24 probes into the matter in three months.

In January last year, Hindenburg accused the Ahmedabad-based ports-to-power conglomerate of “brazen stock manipulation and accounting fraud”, allegations that the Adani Group denied, calling the report “a calculated attack on India”.

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Bond issuances pick up

Fundraising through corporate bonds rose to a five-month high in December, Moneycontrol reported on January 4. Banks and companies issued corporate bonds worth Rs 98,327 crore in December compared with Rs 98,139 crore in the previous month, according to Prime Database, which tracks capital market offerings. Fundraising last month was the highest since June 2023, when entities raised Rs 1.14 lakh crore.

Issuances stood at Rs 9.67 lakh crore in 2023 and exceeded Rs 1 lakh crore on three occasions. The issuances stood at Rs 1.17 lakh crore in March, Rs 1.04 lakh crore in May, and Rs 1.14 lakh crore in June.

In December, the yield on corporate bonds fell by about 10 basis points, tracking the yield on government securities and expectations of an easing monetary policy. The Reserve Bank of India paused its interest rate hikes in April last year, after raising it by 250 bps since May 2022.

Indian bond yields are likely to see a downward movement in 2024 due to expectation of rate cuts by the US Federal Reserve and inflows from foreign investors after the inclusion of government securities in JPMorgan’s Emerging Bond Index starting June 28, 2024.

In its policy meeting this month, the US Fed held its key interest rate steady for the third straight time and set the table for multiple cuts in 2024 and beyond.