Adani Green: Adani Green cancels bond issue worth $1.2 billion

Mumbai: Adani Green Energy, the largest private sector in India renewable energy company, late Tuesday canceled its $1.2 billion investment bond issue after investors demanded a higher return than the company was willing to offer, citing geopolitical uncertaintiespeople familiar with the details said.

“There were many discussions between the company and investors about the price of the issue. Investors demanded better returns and the company was not willing to give in. Finally, the company decided to cancel the issue and wait for a better “It is a time when geopolitical uncertainties are diminishing and the US presidential election is over,” said a person familiar with the matter.

“The company had built an order book of $1.6 billion with large investors from Hong Kong, Switzerland and the United States committing funds. But due to uncertainties related mainly to the US elections, investors were pricing in higher risk that would cost it to the company 50-75 percent points (0.50-0.75 percentage points) more than a normal 20-year bond,” said another person familiar with the matter. “Therefore, the company decided to postpone this issue and look for a better time in the second or third week of November or mid-January.”

The initial price guide was a fixed coupon rate of 7% for the 20-year bond. Proceeds from the bonds were expected to help release funds from an existing $3.4 billion revolving credit line from banks that in turn could have been used to finance new projects, people familiar with the matter said.

A spokesperson for Adani did not immediately respond to an email seeking comment.

This is the first case of an Adani company withdrawing from the dollar bond market after launching an issue. It is also a rare case where a company withdraws from an issue after launching it. In July, the group’s flagship. Adani Companies It did not proceed with a Rs 600-crore domestic bond offering, after initially filing documents with the market regulator, but subsequently launched a Rs 800-crore public retail bond in September. In February 2023, Adani Enterprises canceled a follow-on public offering of shares. after a report by US short-seller Hindenburg Research the previous month sparked a sell-off in foreign-listed stocks and bonds of Adani Group companies. The fallout from the report led to a decline in Adani’s market capitalization by Rs 9 lakh crore. The stock has gained since then. The latest long-term bond was supposed to help the company match its liabilities to the useful lives of solar and wind assets that have 25-year power purchase agreements (PPAs), people familiar with the matter said.

“The 20-year fixed coupon bond allows the cash flows of these assets to be fully aligned with debt servicing. It was raised by four subsidiaries namely Adani Hybrid Energy Jaisalmer One, Adani Hybrid Energy Jaisalmer Two, Adani Hybrid Energy Jaisalmer Four and Adani Solar Energy Jaisalmer One, through a co-obligor structure in which each unit will guarantee the obligations of the others,” a person aware of the plan had said.

All these assets are based in Rajasthan and together have a capacity of 1,840 MW of operational wind and solar energy.

The company raised $409 million in March for its solar assets through an 18-year, 6.7% bond. This was the group’s first dollar-denominated bond issue after the Hindenburg report.

The new bonds were to be protected by a first charge on escrow and project accounts, amounts periodically received under PPAs, fixed assets (other than real estate) and a pledge on 100% of the shares of each issuer through its intermediate holding company (such as Adani Renewable Energy Holding One), Nomura said in its Daily Asia Credit Views report on Tuesday. Rating agencies Moody’s and Fitch had rated the bonds Baa3/Stable and BBB-/Stable, respectively, in line with the company’s rating.