Investors lapped up the first US dollar bond sale from the Adani Group since the Hindenburg report, with bids more than seven times the USD 409-million offer.
The bonds from Adani Green with a tenor of 18 years were priced 6.7%, better than the indicated price as it received bids for more than USD 3 billion.
The pricing was tighter than the initial guidance of 7.12% earlier in the day as strong demand ensured that company could finally issue the bonds at 42 basis points below the initial guidance. One basis points is 0.01 percentage point.
“The proceeds will be used to refinance bonds maturing later this year. The tenure of these bonds is matched with the solar power projects which are already operational with a 25-year power purchase agreement with NTPC and Solar Energy Corp of India (SECI). Since these solar projects do not have operational risks, this refinancing helps in also extinguishing any financial risk through a long tenure bond,” said a person familiar with the issue. The bond tenure at 18-year was matched with the residual tenure of the PPA.
The bonds are issued by three SPVs of Adani Green – Adani Green Energy (UP), Parampujya Solar Energy, and Prayatna Developers – stapled together. Barclays Bank, MUFG Securities and DBS Bank were among more than a dozen bankers to the issue.
“There have been more than 180 investors which have bid for this issue from across the world. The issue was subscribed seven and a half times because of the strong demand from investors,” said a second person aware of the issue.
In a rating release last week, Fitch Ratings had assigned a BBB- rating on these bonds which are due in 2042. “The proposed notes’ long tenor fully amortising structure eliminates the refinancing risk during the portfolio’s life. The proposed notes will have a structure similar to the existing notes, which benefit the noteholders from protective structural features restricting distributions,” Fitch said.
The average maturity of the bonds is at 12.7 years, meaning that taking into Adani Green’s current cash flows, the bonds could be repaid within 12 years and seven months. An Adani spokesperson did not reply to an email seeking comment.
This is the first time an Adani Group company has tapped the overseas bond market since the Hindenburg report last year that triggered a selloff in the group’s stocks and regulatory probe for alleged violation of securities laws.
The group has denied the allegations.
