Billionaire Gautam Adani-controlled Adani Ports and Special Economic Zone (SEZ) Ltd on Wednesday launched an offshore bond offering, raising as much as $750 million.
This is the third and the largest offshore bond deal launched by an Indian company since the pandemic disrupted global markets in March. State-owned REC Ltd and agrochemicals major UPL Ltd raised $500 million each in May and June, respectively.
The Adani Ports bond sale comes after SoftBank-backed Indian renewable company SB Energy pulled back its $600 million bond offering in July.
According to the terms of the deal, seen by Mint, Adani Ports is raising the capital through seven-year bonds, maturing in 2027, at a rate of 4.2%. Investment banks Barclays, Bank of America and Citigroup, among others, are advising Adani Ports on the bond sale. The capital raised will be used to repay loans of Adani Ports and its subsidiaries, which could include the debt of Krishnapatnam Port Co. Ltd, which Adani agreed to acquire in January. The deal is yet to be closed.
Earlier in July, Adani Ports’ board had approved offshore bond capital raise of up to $1.25 billion. A spokesperson for Adani group could not be immediately reached for comment. According to industry experts, offshore bond issuances from Indian corporates continue to be muted, especially for below-investment-grade issuers or so-called high-yield issuers.
“I think that while the hedging cost for issuers has gone down substantially due to Mifor collapse, the market isn’t there yet in terms of its evolution for non-IG (investment grade) issuers from India," said Shantanu Sahai, managing director and head of debt at Nomura India.
“The markets had started to open up secularly since early June which had led to the hope that HY (high yield) issuers would be able to access it in July or August, but the opening has stalled while the market moves sideways in the past two-three weeks. The only HY issuance that has been seen has been from China," said Sahai.
He added that the second coronavirus wave across Asia as well as concerns over ratcheting US-China rivalry and the economic recovery have been the primary reasons for investors becoming more cautious around credit. Last December, Mint had reported that after tapping the dollar bond market twice in 2019, Adani Ports was preparing for a fresh issuance of dollar bonds in 2020.
In June 2019, Adani Ports had raised $750 million through a bond sale, and followed it up with a $650-million buyback offer for bonds maturing in 2020 in the next month