Adani Ports to raise $500 mn from overseas bond sale

Mumbai: Adani Ports & Special Economic Zone, the largest port operator in the country, is in the international debt market with a benchmark issue to raise at least $500 million. This is the third large bond sale by domestic issuers after Exim Bank's $1 billion issue at record low prices in the first week of the month followed by SBI in the second week with a $6 billion sale.

Adani Ports is the largest port developer and operator in the country in terms of volume, with coal and other dry bulk terminals showing an annual capacity of 478.6 million tonnes. "We are in the dollar debt market and are planning to raise $500 million through a Reg S issue," a merchant banking source said on Wednesday without sharing other details like pricing and tenor saying the issue is the market.

The last time it had paid 4.2 per cent coupon to $750 million issue last July. While Reg S issue means resident American investors can't subscribe to the issue, benchmark issue means a large issue with the quantum being at least $500 million. The company will use the proceeds from the issue for primarily for refinancing the early redemption of its dollar bonds due in 2022. The issue has been rated BBB- by Fitch and Baa3 by Moody's. In July 2020, the company had raised $750 billion and in December another $300 million, to retire some of its higher cost debt.

The highly leveraged Adani Group is on massive expansion mostly using debt. Fitch Ratings in a note gave the proposed senior unsecured notes sale by the port operator a BBB- rating with a negative outlook. The proceeds will be used primarily for refinancing the early redemption of its dollar bonds due in 2022, the agency said. The rating reflects the company's market leading position, the stability of long-term cargo revenue and its operational efficiency, the agency said, adding the pandemic may result in weaker domestic demand and exports, but cargo mobility is largely uninterrupted despite the global lockdowns.

Adani Ports accounted for around 17 per cent of the country's seaborne cargo in FY20. It operates 10 ports across the costs with the Mundra Port contributing 62 per cent of the group's throughput and serves as the gateway to the landlocked Northwestern region of the country.