Billionaire Gautam Adani’s group is looking to raise at least $10 billion in new debt over the next year as his conglomerate seeks to refinance its high-cost borrowings and fund projects in the pipeline, citing sources privy to the development, news agency Bloomberg reported on Friday.
The group, using multiple instruments including foreign currency debt and green bonds, plans to raise up to $6 billion to swap its existing high-interest debt with lower-cost borrowings and deploy the rest for project financing, of the sources said, while adding that the effort could start as early as the ongoing December quarter.
The move is aimed at lowering the ports-to-power group’s overall burden of repayments, which has come under the spotlight as Asia’s richest person pursues a string of ambitious acquisitions to diversify into sectors like green energy, digital services, and media.
According to the Bloomberg report, despite rising interest rates worldwide, Adani Group is confident of securing lower-cost loans due to its bigger asset base now. The timing of this fundraising effort, however, may change according to global market conditions, sources mentioned.
An Adani Group representative declined to Bloomberg’s request for comment on the fundraising plan.
The debt raising is separate to the company’s plans to explore strategic equity investments in the group, the sources said.
Adani Green Energy Ltd. saw robust demand for its debut offering last September, receiving orders of more than $3.5 billion for issuance of just $750 million. But the macroeconomic headwinds have become much stronger since.
Dollar-denominated financing costs have shot up over the past two months, according to a Bloomberg index of Indian dollar-denominated corporate and quasi sovereign bonds, which includes Adani companies. The relative cost of swapping old debt for new is now the highest since the global financial crisis.
Yields on Adani bonds have surged this year, as dollar borrowing costs rise and are well above the level at issue. That suggests the companies may need to pay a premium to borrow now. For example, the 2029 bond issued by Adani Ports now yields 9.4 per cent, more than double the rate at issue. The yield on Adani Green’s 2024 bond has increased threefold since it was sold, data compiled by Bloomberg revealed.
Raising lower-cost debt in such a tough market will test the group’s mettle and goodwill with bond investors and lenders. The flagship is already looking, however, to test the waters.
The report pointed out that Adani Enterprises Ltd. is planning a maiden bond sale of 10 billion rupees ($121 million) to individual investors, according to a statement this week from Care Ratings, which assigned an A+ score for the proposed issuance.