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ECT-linked Adani to raise $ 500 m via bond sale

27 Jan 2021

Adani Ports and Special Economic Zone Ltd. (APSEZ), which is tipped to be given a stake in the East Container Terminal (ECT) of the Colombo Port by the Sri Lankan Government, on Tuesday (26) announced a $500 million bond sale. India’s Livemint reported that this is its second such offering in the last few months, as the group flagship seeks to capitalise on benign interest rates overseas.  The proceeds of the bond sale would be used to finance early redemption of dollar bonds of a similar amount maturing next year. The bonds have a 10-year maturity. Barclays, Bank of America, and Citibank are advising the company on the bond sale. In a regulatory filing, APSEZ stated: “...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 bonds have been rated BBB- by 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 pandemic may result in weaker demand and exports, but cargo mobility is 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.  The billionaire Gautam Adani-led group has been the most active Indian issuer in the dollar bond market in the last few years, raising billions of dollars in foreign debt across businesses ranging from ports, renewables and energy transmission and distribution. In December, the group’s container terminal business raised $ 300 million through an overseas bond issuance. The Adani group has been tipped to be given a maximum 49% stake in the ECT, with the Sri Lanka Ports Authority (SLPA) retaining the remaining 51%, despite vociferous objections from trade unions and the political opposition.

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