Ahmedabad (06.12.2024): Adani Group of companies’ liquidity seems to be stable after accounting for near-term maturities for offshore debt, JPMorgan said, adding that Adani Green Energy Ltd's bond issue will be in focus. Bonds of the Group have gone through a period of volatility after indictments from the US authorities, the global brokerage house said in a report. Since then, the spreads of the group's Bonds have settled, widening by about 100–200 basis points, it noted. JPMorgan said the ports-to-power conglomerate's short-tenor bonds saw more spread widening due to higher dollar prices.
JPMorgan has given ‘Overweight’ on four Adani group bonds—three issued by Adani Ports & SEZ, and one by Adani Electricity Mumbai Limited —Subsidiary of Adani Energy Solutions. It has taken neutral stand on other five Adani bonds and is underweight on only one bond—issued by AGEL.
On average, the group's bond yields have widened by: Adani Ports & Special Economic Zone: 140 basis points. Adani Transmission: 180 basis points. Adani Electricity Mumbai: 140 basis points. Adani Green RG bonds: 150 to 160 basis points. After these moves, the brokerage house prefers some short-end bonds and 'ADTIN 2026s' (Adani Transmission) in particular, on which they moved to an 'overweight' rating. Within the ADSEZ (Adani Ports & SEZ) curve, which is an 'overweight', JPMorgan prefers 'ADSEZ 32s' versus 'ADSEZ 41s', thereby initiating coverage with overweight on the former and upgrading the latter to 'overweight'.
Under the risks section, it further added, that Adani Bonds could do well than anticipated (i) if there is a quick resolution of the SEC/DoJ charges; (ii) successful refinancing of the upcoming bonds and credit facilities; and (iii) improved operating performance. Spread of Adani Bonds seem to have settled after an initial volatility after US Sec and DoJ Indictment, said JPM.
It remained 'neutral' on 'ADANEM' (Adani Electricity) and 'Adani Green RG bonds', where they believe the headline risks are higher. After tabulating near-term maturities for offshore debt at various group companies, JPMorgan took "varying degrees of comfort". It said the key to watch among the bond-issuing entities is mainly Adani Green, which has a decent-size loan ($1.1 billion) due in March 2025. One of the push-backs from the investors was the unsecured nature of the ADSEZ dollar-denominated bonds, the brokerage said. However, JPMorgan favoured cash flows over security largely on its ability to scale and grow using internal cash flows.
