Gautam Adani's conglomerate successfully issued a $600 million, 20-year green dollar bond on Wednesday, marking a comeback following a postponed offering in October. The initial attempt to raise capital was met with investor resistance over pricing concerns, leading to its withdrawal.
The clean energy arm, Adani Green Energy Ltd., ultimately placed the notes with a yield of 7.45%. This represents a slight reduction from initial discussions around 7.75% and a significant increase from the 7% price guidance preceding the October postponement. According to a source familiar with the matter, who requested anonymity, the final yield reflected a recalibration following the earlier market feedback.
Analysts at CreditSights, Lakshmanan R and Jonathan Tan, had predicted a yield of approximately 7.5% in a pre-pricing research note, based on the trading levels of other Adani Green debt. The proceeds from the bond sale, according to the source, will be allocated to the repayment of existing foreign-currency loans.
The successful bond issuance coincides with a period of favourable market conditions for Asian dollar bonds. Following Donald Trump's election victory, credit spreads on Asian dollar notes reached record lows. This surge in investor appetite spurred a wave of primary market offerings, with borrowers including Alibaba Group Holding Ltd. and State Bank of India collectively issuing over $7.5 billion in debt during the first two days of the week â one of the busiest periods in recent weeks.
While spreads on Asian bonds with similar credit ratings to Adani's new note have tightened by around 10 basis points since mid-October, 10-year Treasury yields have concurrently increased by approximately 40 basis points over the same period, according to data compiled by Bloomberg.
This successful bond offering comes as the Adani Group continues its efforts to regain investor confidence following the damaging allegations of the Hindenburg Research report in 2023. This short-seller report triggered a significant market downturn, resulting in over $150 billion wiped off the value of Adani Group stocks. The group's renewed focus on growth and strategic investments, including this bond issuance, signifies its commitment to overcoming the challenges posed by the report and fostering a renewed sense of trust amongst investors. The successful sale demonstrates a degree of restored investor confidence, though the long-term impact of the Hindenburg report remains to be seen.
This development underscores the volatile nature of the international bond market and the importance of strategic pricing for successful fundraising. Adani's ability to secure funding despite previous setbacks highlights the company's resilience and continuing access to capital markets.
