InvestorQ : Why has Adani Ports raised $500 million in the global bond markets?
diksha shah made post

Why has Adani Ports raised $500 million in the global bond markets?

Juvina Maggie answered.
1 year ago

This is part of the series of fund raising that Adani Ports has been doing in the global market for two reasons. Firstly, it is getting these funds now at extremely competitive rates globally. Secondly, these funds will help the group in reducing its level of debt as it remains among the most levered business houses in India.

Adani Ports currently operates India’s largest port at Mundhra and SEZ. It has just raised $500 million through the issue of 10-year bonds which were placed with global investors at an extremely attractive and economical coupon rate of 3.10%. What is more interest is the demand scenario. This senior unsecured Dollar notes were subscribed 6 times over.

The coupon of 3.10% is sharply lower than the 4.2% that Adani Ports paid last July. This is a signal of falling rates globally and also the ability of leading Indian companies to now raise funds in the global market at extremely competitive rates. Adani Ports is also right now in the midst of a global bond issue worth $500-million of Reg-S bonds.

Reg-S bonds are not open to American citizens but others can apply for the same. It may be recollected that since July 2020, Adani has successfully raised $1.55 billion through the dollar-debt route. This is largely due to the pre-eminent position that Adani Ports holds in the Indian market and its strong presence in the infrastructure space.

The immediate challenge for Adani Ports is to reduce the group debt or at least re-finance at lower rates. Adani has been raising cheap dollar debt to refinance and retire its high cost debt for quite some time now and there has been good appetite. Cost of debt matters, as the group is highly leveraged and operating 11 ports and terminals can be capital intensive.