Adani Bond portfolio liquidity stable after the dust settles in US: JPMorgan
Mumbai Mumbai: As the dust around Adani Group bonds begins to settle following recent US-related developments, global brokerage JPMorgan has said the liquidity of the Adani bond portfolio appears stable, and assigned an overweight (OW) rating on four bonds of Adani Group firms. In a note, JPMorgan assigned an OW rating on three bonds of Adani Ports and Special Economic Zone (APSEZ) and one bond of Adani Electricity Mumbai Ltd (AEML), a subsidiary of Adani Energy Solutions. It said Adani Group bonds have stabilised after a period of volatility, extending yields by around 100-200 basis points. Liquidity of group companies appears stable considering near-term maturities for offshore debt, JPMorgan said, adding that focus will be on the bond issue of Adani Green Energy Ltd.
“In the case of Adani Ports, the ability to scale and grow using internal cash flows gives us strong comfort on the intrinsic equity value of such a business, which in turn reduces the scope for credit stress,” the note written by the global brokerage said. JPMorgan said the port-to-power group’s short-term bonds saw spreads widen further due to higher dollar prices. On average, the group’s bond yields have increased by – Adani Ports & Special Economic Zone: 140 basis points, Adani Transmission: 180 basis points, Adani Electricity Mumbai: 140 basis points and Adani Green RG Bonds: 150 to 160 basis points. Following these moves, the brokerage house prefers certain short-end bonds and particularly ‘ADTIN 2026’ (Adani Transmission), on which it has given an ‘overweight’ rating. Within the ADSEZ (Adani Ports and SEZ) curve, which is ‘overweight’, JPMorgan prefers ‘ADSEZ 32’ versus ‘ADSEZ 41’, thereby initiating coverage with an overweight on the former and upgrading the latter to ‘overweight’. After tabulating near-term maturities for offshore debt at various group companies, JPMorgan took “varying degrees of ease”. “Overall, we take varying degrees of ease, and believe bond-issuing entities primarily need to be monitored on Adani Green, which has a decent-sized debt due in March 2025 ($1.1 billion),” the global financial services major said. Bernstein Research said in a recent note that operational risk at the Adani Group has come down over the years, with a decline in share pledges and improvement in leverage among others.
