India's Adani dollar bonds see robust demand; signals comeback to global market

By Bhakti Tambe and Shankar Ramakrishnan

MUMBAI (Reuters) -India's Adani group saw massive demand on Monday for its first dollar bond since a short-seller attack last year, in what two banking sources said was being seen internally as a test for the conglomerate's access to global capital markets.

Adani Green Energy, one of India's largest renewables companies, priced a $409 million 18-year bond after receiving nearly $3 billion of demand for it, said the sources, who have direct knowledge of the deal.

The issuer received bids from 163 investors, of which, 45% were from Asia, 24% from the United States, 21% from Europe and the rest from the Middle East, the term sheet seen by Reuters showed.

Analysts at CreditSights had noted that the bonds were likely to generate strong demand given the lack of high-yield paper in the Asian U.S. dollar bond market and the enthusiasm for Indian renewable infrastructure credit.

Adani Green's bonds will pay a yield of 6.7%, 42.5 basis points cheaper than levels initially proposed when the deal was announced this morning, thanks to the strong demand.

"Deals that have come from India so far this year have done very well on demand from investors who are looking to add India risk," said Diwakar Vijayvergia, senior vice president and portfolio manager, Asia fixed-income team at AllianceBernstein.

"India is like the shining star in Asia right now."

The final coupon pricing was sharply below the fair value seen by CreditSights at 7.45% and also lower than Nomura's 6.8250%.

The bonds are trading at a premium, which means at yields lower than the actual coupon, in the secondary market, according to bankers.

DEMAND MAY SPUR FURTHER ISSUES

Other operating companies in the group could follow with bond issues after seeing robust demand, the first source said.

Adani Energy Solutions is planning to raise around $400 million-$500 million through a private placement of bonds for which it is in early talks with U.S. institutional investors, Reuters reported last week.

The board of Adani Green Energy has approved the above-mentioned pricing, tenure and the other terms of the bond issue, it informed Indian exchanges on Tuesday.

Adani group stocks and bonds saw a massive selloff early last year after U.S. short seller Hindenburg Research issued a report that alleged improper governance practices, stock manipulation and use of tax havens by the Adani Group. The group has denied these allegations.

"In the last 3-6 months, investors have realized that the regulators have investigated these allegations and nothing material has really come out. The underlying assets of Adani group companies are good, and investors are getting an increased amount of comfort to own Adani risks," Vijayvergia said.

In the aftermath of the selloff Adani executives and advisers launched a charm offensive with investors globally, according to the bankers.

India's Supreme Court in January said that the Adani Group does not need to face more investigations beyond the market regulator's current scrutiny.

The proceeds from the bond issue which are rated 'Ba1' by Moody's Investor Service and 'BBB-' by Fitch Ratings will be used to repay $500 million of senior unsecured notes maturing in June.

(Reporting by Shankar Ramakrishnan and Bhakti Tambe; Editing by Swati Bhat, Michael Perry, Raju Gopalakrishnan and Sharon Singleton)