Adani Enterprises Makes a Comeback in Indian Bond Market, Raises Funds at Higher Rate

13 Jul 2023 , 11:56 AM

Adani Enterprises, a major Indian conglomerate, has made its return to the local corporate bond market after a challenging period earlier this year. In January, the company faced a significant decline in its securities following a critical report by U.S.-based short-sellers, which alleged improper governance practices and stock manipulation within the Adani Group.

Adani Enterprises successfully raised 12.50 billion rupees (approximately $152 million) through the sale of three-year bonds with an annual coupon rate of 10%. The bonds were issued at a yield of 10%, with a spread of nearly 300 basis points over comparable government bond yields.

Unlike government bonds that pay interest semi-annually, Adani Enterprises’ bonds will pay interest annually. The company previously raised funds through a primary placement of bonds in September 2022, offering an 8.40% yield for a tenure of 17 months.

The recent bond issue required Adani Enterprises to pledge 21.4% of the shares of its subsidiary, Adani Road Transport, as collateral. The bonds were directly placed with investors, bypassing the involvement of merchant bankers.

Family offices, some corporates, and alternative investment funds subscribed to the bonds. Local investment bankers have shown hesitancy in dealing with Adani group companies’ debt, potentially influencing the decision for direct placement with select investors.

Adani Enterprises’ outstanding bonds are currently rated A+ by Care Ratings, while India Ratings has assigned an A+ rating to a proposed public issue yet to be launched.

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