Adani Green defers dollar bond sale as investors seek higher yield

Bloomberg Updated - October 16, 2024 at 03:09 PM.

The postponement comes as the media-to-mining group has been refocusing on growth opportunities

Billionaire Gautam Adani’s conglomerate postponed a dollar bond offering at the last minute after some investors pushed back on the pricing, in a rare instance of a borrower delaying a deal in the final stages of marketing.

Units of Adani Green Energy Ltd., the group’s clean-energy business, had reached what’s called “final price guidance” on an offering of a 20-year green note Tuesday, with the bond set to yield 7 per cent, according to a person familiar with the matter who asked not to be identified. But just hours later, the person said the proposed deal would no longer go ahead.

Some investors wound up demanding a higher yield due to volatility in US rates before elections on Nov. 5, separate people said. Adani wasn’t willing to pay more to sell the secured notes, which had the lowest investment-grade ratings, and would bring the deal back to the market following the US vote or in early January, they said.

The postponement comes as the media-to-mining group has been refocusing on growth opportunities, after rebounding from a short-seller report in 2023 by Hindenburg Research that sparked a more than $150 billion rout in Adani Group stocks. The delay may indicate that Adani Group companies still need to pay a spread premium to tap the dollar-bond market, as governance concerns persist, Sharon Chen, a credit analyst at Bloomberg Intelligence, wrote Wednesday.

The proposed bond didn’t provide much spread pickup at 7 per cent to an existing Adani Green 2042 note, though the planned offering had better expected ratings, Chen also pointed out.     

An Adani representative wasn’t immediately available to comment.

By contrast, globally, issuers have been front-loading bond sales in the dollar market given concerns about increased volatility after the election. High-grade issuance in the US hit a record for the month of September, according to data compiled by Bloomberg.         

Adani Green’s 2042 note declined by 0.5 cents on the dollar Wednesday morning, its biggest drop in more than a month, Bloomberg-compiled prices show. It led a slump in most of the group’s bonds.  

Adani Group may sell $1.5 billion worth of bonds by the end of February, mainly through the Adani Green Energy and Adani Energy Solutions Ltd. units and special purpose vehicles, people familiar with the matter said last month. Proceeds from the postponed debt sale were to repay foreign-currency loans. 

Dollar bond sales from Indian issuers are running at their highest in three years, with companies raising about $10 billion so far in 2024. Spreads on such debt from Asian investment-grade borrowers is near record lows, according to a Bloomberg index.

More stories like this are available on bloomberg.com

Published on October 16, 2024 07:41

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