Adani Ports and Special Economic Zone Ltd (APSEZ) on Tuesday announced a $500 million bond sale, its second such offering in the last few months, as the Adani group flagship seeks to capitalize on benign interest rates overseas
Adani Ports and Special Economic Zone Ltd (APSEZ) on Tuesday announced a $500 million bond sale, its second such offering in the last few months, as the Adani group flagship seeks to capitalize on benign interest rates overseas.
The proceeds of the bond sale would be used to finance early redemption of dollar bonds of a similar amount maturing next year. The bonds have a 10-year maturity. Barclays, Bank of America and Citibank are advising the company on the bond sale.
“...the committee has approved the (i) preliminary offering circular in relation to a proposed issuance of fixed rate senior unsecured notes by the company and (ii) the tender offer memorandum in relation to its proposed tender offer to purchase, for cash, any and all of its outstanding $500 million 3.95% senior notes due 2022," APSEZ said in a regulatory filing. The bonds have been rated BBB- by rating agency Fitch.
“The rating reflects APSEZ’s market leading position in India, the stability of long-term cargo revenue and its operational efficiency. The pandemic may result in weaker demand and exports, but cargo mobility is uninterrupted despite the global lockdowns," Fitch said in a note on Tuesday.
“APSEZ benefits from cargo under long-term contracts, which accounts for about 60% of total traffic. We forecast average leverage of 3.2x during the five-year forecast period for APSEZ under our rating case," it added.
Billionaire Gautam Adani-led group has been the most active Indian issuer in the dollar bond market in the last few years, raising billions of dollars in foreign debt across businesses ranging from ports, renewables and energy transmission and distribution. In December, the group’s container terminal business raised $300 million through an overseas bond issuance.
“Adani has been the most active in taking advantage of the lower interest rates in the offshore debt market and now, it’s a group that the offshore market knows well, which makes it easy for them to tap foreign capital regularly. They have also had to look more at this option as a lot of domestic lenders had reached their group limits, restricting access to domestic debt," a person advising the group’s bond-raising initiatives said on condition of anonymity.
Several Indian companies including State Bank of India and the Export Import Bank of India have raised funds through dollar bonds this month. GMR group-owned Hyderabad International Airport also plans to raise $300 million via overseas bonds to finance capital expenditure.
For the six months ended 30 September, the ports operator recorded a revenue of $692 million, declining from $803 million a year earlier. Profit, however, fell only marginally to $287 million during the period under review from $298 million in the previous fiscal.