Since March 2020, when the coronavirus disrupted the global markets, this is the third and the largest offshore bond deal launched by an Indian company. State-owned REC Ltd and agrochemicals major UPL Ltd raised US$ 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 US$ 600 million bond offering in July.
As part of the deal, Adani Ports is raising the capital through seven-year bonds, maturing in 2027, at a rate of 4.2 per cent. Advising partners of Adani ports on the bond sale are investment banks Barclays, Bank of America, and Citigroup, among others. It plans to use this capital raised 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.
Adani Ports’ board had approved earlier approved offshore bond capital raise of up to US$ 1.25 billion. Though, no statement was released by the company.
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 Mr 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 Mr Sahai.
In June 2019, Adani Ports had raised US$ 750 million through a bond sale, and followed it up with a US$ 650-million buyback offer for bonds maturing in 2020 in the next month.
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