In a remarkable display of market resilience, Adani Green Energy, a part of the Adani Group, has witnessed a robust demand for its first dollar bond since facing a short-seller attack last year. Banking sources indicate that the overwhelming response to the $409 million 18-year bond is viewed internally as a pivotal test for the conglomerate’s access to global capital markets.
Sources with direct knowledge of the deal reveal that Adani Green Energy successfully priced the bond after receiving nearly $3 billion in demand. A total of 163 investors participated, with 45% from Asia, 24% from the United States, 21% from Europe, and the remaining from the Middle East, according to an anonymous company source cited by Reuters on Tuesday.
The bonds, paying a yield of 6.7%, proved 42.5 basis points cheaper than initially proposed levels, thanks to the strong demand. This pricing exceeded market expectations, coming in below the fair value estimated by CreditSights at 7.45% and even lower than Nomura’s projection of 6.8250%.
CreditSights analysts had anticipated the bonds’ strong demand, considering the scarcity of high-yield offerings in the Asian U.S. dollar bond market and the growing enthusiasm for Indian renewable infrastructure credit. Nomura, in its note, highlighted the absence of a new issuer premium on Adani Green’s bond issue, considering the limited supply of Asian high-yield bonds and the positive performance of the latest bond offering by IRB Infrastructure Developers.
Encouraged by the success of Adani Green Energy’s bond issue, sources suggest that other operating companies within the Adani Group may follow suit with bond offerings.
Adani Energy Solutions, for instance, is reportedly in early talks with U.S. institutional investors to raise $400 million-$500 million through a private placement of bonds, as reported by Reuters last week.
The board of Adani Green Energy has approved the pricing, tenure, and other terms of the bond issue, as informed to Indian exchanges on Tuesday. Moody’s Investor Service has assigned a ‘Ba1’ rating, while Fitch Ratings has assigned ‘BBB-‘ to the bonds.
This positive market response marks a significant turnaround for Adani group company stocks and bonds, which faced a substantial selloff early last year following allegations by U.S. short seller Hindenburg Research. The group denied these allegations, and in response, Adani executives and advisers embarked on a global charm offensive with investors.
The proceeds from the bond issue will be utilized by Adani Green Energy to retire $500 million of senior unsecured notes maturing in June.
