Adani Ports & Special Economic Zone (APSEZ) on Tuesday announced that the company has entered 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 moth followed by SBI in the second week with a $6 billion sale.
The proceeds will be used primarily for refinancing the early redemption of its dollar bonds due in 2022, the agency said. The bonds have a period of 10-year maturity.
“…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,” APSEZ said in a regulatory filing. The issue has been rated BBB- by Fitch and Baa3 by Moody’s.
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 told PTI 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 had raised $750 billion in July last year 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 rating reflects APSEZ’s market leading position in India, the stability of long-term cargo revenue and its operational efficiency. The pandemic may result in weaker demand and exports, but cargo mobility is uninterrupted despite the global lockdowns,” Fitch said.
In a separate note, Moody’s assigned a Baa3 rating to the issue with negative outlook.
The rating also takes into consideration the long-term growth potential of the domestic economy, a key driver behind the large increase in the volume of traded goods over the past few years, it said, adding the port operator reported 5.4 per cent growth in cargo volumes in the first nine months of current fiscal year.
“We forecast that Adani Port’s performance over next two to three years will be driven by the ramp-up of capacity relating to its recently commissioned ports and terminals and its growing share of containers,” it said.
Last October, Adani Port had acquired 75 per cent stake in Krishnapatnam Port, which was primarily funded through a $750 million bond issuance in July.
Its cargo volume rose 7 per cent in Q2 of the current fiscal. Its throughput growth normalised in FY20 after a sharp rebound of 15 per cent in FY19 growing at a low 7 per cent in FY20, but faster than the 4 per cent for all domestic ports.
Adani Ports also operates the Kattupali Port, LPG and terminals at Dhamra and Mundra ports.