JP Morgan Assesses Stability in Adani Bond Portfolio as US Turbulence Eases
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Mumbai, Dec 6 (NationPress) As the uncertainties surrounding Adani Group bonds appear to have calmed in light of recent US events, global brokerage JP Morgan has indicated that the liquidity of the Adani bond portfolio is stable. The firm has assigned an Overweight (OW) rating to four bonds associated with the Adani Group.
In its analysis, JP Morgan awarded OW ratings to three bonds from Adani Ports and Special Economic Zone (APSEZ) and one from Adani Electricity Mumbai Ltd (AEML), a subsidiary of Adani Energy Solutions.
The bonds associated with Adani Group have stabilized following a phase of volatility, with spreads widening by approximately 100–200 basis points, according to the report.
JP Morgan noted that the liquidity of the Group's companies appears stable after factoring in the near-term maturities of offshore debt, further mentioning that the bond issuance from Adani Green Energy Ltd will be under scrutiny.
"The capacity to expand and develop using internal cash flows from Adani Ports provides us with substantial confidence regarding the intrinsic equity value of this business, subsequently minimizing the likelihood of credit stress," the brokerage's note stated.
JP Morgan pointed out that the conglomerate, which spans various sectors from ports to power, experienced greater spread widening in its short-tenor bonds due to elevated dollar prices.
On average, the yields of the group's bonds have widened as follows: Adani Ports and Special Economic Zone: 140 basis points, Adani Transmission: 180 basis points, Adani Electricity Mumbai: 140 basis points, and Adani Green RG bonds: between 150 to 160 basis points.
Following these adjustments, the brokerage has shown a preference for certain short-end bonds, particularly the 'ADTIN 2026s' (Adani Transmission), which they have rated as 'overweight'.
Within the curve of ADSEZ (Adani Ports & SEZ), which also holds an 'overweight' rating, JP Morgan favors the 'ADSEZ 32s' over the 'ADSEZ 41s', hence initiating coverage with an overweight rating for the former while upgrading the latter to overweight.
After considering near-term maturities for offshore debt across various group entities, JP Morgan expressed "varying degrees of comfort".
"In summary, we assert that we experience varying degrees of comfort and believe that a critical focus among the bond-issuing entities should be Adani Green, which has a sizable loan ($1.1 billion) maturing in March 2025," stated the global financial services firm.
According to a recent note from Bernstein Research, the operational risks associated with the Adani Group have diminished over recent years, attributed to a reduction in share pledges and an improvement in leverage, among other factors.
