Adani Ports to raise $500 mn via dollar bonds to refinance overseas debt

Mumbai: Billionaire Gautam Adani’s flagship company Adani Ports & Special Economic Zone Ltd (APSEZ) on Tuesday said it will raise $500 million through dollar bonds, which will be used for early redemption of dollar bonds of the company which mature in 2022.

“…the committee has approved the (i) preliminary offering circular in relation to a proposed issuance of fixed rate senior unsecured notes by the company and (ii) the tender offer memorandum in relation to its proposed tender offer to purchase, for cash, any and all of its outstanding $500 million 3.95% senior notes due 2022,” the company said in an exchange filing.

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The proposed bonds will have a 10-year maturity. Investment banks Barclays, Bank of America and Citibank are advising the company on the proposed bond issuance.

The proposed bonds have been rated BBB- by international rating agency Fitch.

“The rating reflects APSEZ’s market leading position in India, the stability of long-term cargo revenue and its operational efficiency. The coronavirus pandemic may result in weaker domestic demand and exports, but cargo mobility is largely uninterrupted despite the global lockdowns,” Fitch said in a note on Tuesday.

“APSEZ benefits from cargo under long-term contracts, which accounts for about 60% of total traffic. We forecast average leverage of 3.2x during the five-year forecast period for APSEZ under our rating case,” it added.

Adani group has been the most active Indian issuer in the dollar bond market in the last few years, having raised several billions of foreign debt across its businesses from ports, renewables and energy transmission and distribution.

In December, the group’s container terminal business raised $300 million through an overseas bond issuance.

“Adani has been the most active in taking advantage of the lower interest rates in the offshore debt market and now its a group that the offshore market knows well, which makes it easy for them to tap foreign capital regularly. They have also had to look more at this option as a lot of domestic lenders had reached their group limits, restricting access to domestic debt,” said a person advising the group’s bond raising initiatives, speaking on the condition of anonymity.

Several Indian companies, including the country’s largest lender State Bank of India and the Export Import Bank of India, have raised funds through dollar bonds this month. GMR group-owned Hyderabad International Airport also plans to raise $300 million through overseas bonds to finance capital expenditure.

Adani Ports has also opened a tender offer to redeem its bonds maturing in 2022. The tender offer will close on 2 February, unless extended, the company said.

“The tender offer is conditioned on the issuance of the New Notes in a principal amount of at least $500 mn terms and conditions satisfactory to the company. The tender offer is also subject to the satisfaction or waiver of a number of other conditions as set forth in the tender offer memorandum,” the company said.

For the six months ended 30 September, the ports operator recorded a revenue of $692 million, down from $803 million in the same period last in the previous year, due to the impact of the covid-19 pandemic. Profit, however, fell marginally to $287 million in the six months ended 30 September, compared to $298 million in the previous fiscal.

The company said its cargo volumes have seen a better recovery compared to large ports operated by the government. For the nine month ended 31 December, APSEZ’s cargo volumes grew 5.4% year on year.

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