January 19, 2025 01:07 pm (IST)
Follow us:
facebook-white sharing button
twitter-white sharing button
instagram-white sharing button
youtube-white sharing button
Kolkata court convicts civic volunteer Sanjoy Roy in RG Kar rape-murder case | Saif was stabbed repeatedly, he tried to protect Taimur and Jeh: Kareena Kapoor Khan records statement with police | Escaped death by 20-25 minutes: Sheikh Hasina alleges opposition wanted to kill her | Cabinet's decision on 8th Pay Commission will improve quality of life, give boost to consumption: PM Modi | 'It has been an incredibly challenging day': Kareena Kapoor Khan requests privacy after Saif Ali Khan's stabbing incident | 'Distorting history': Mamata slams Mohan Bhagwat over his Ram Temple consecration 'marking true independence' remark | Saif Ali Khan stabbing incident: Actor who received six wounds is out of danger, one accused identified | ISRO creates history docking two Indian satellites in space | US-based short seller Hindenburg Research that targeted Adani Group and SEBI chairperson to be disbanded | Saif Ali Khan stabbed during burglary attempt at home, hospitalised; police probe on
Although bonds are not secured by collateral, JP Morgan emphasized their robust cash flows. (Photo courtesy: x.com/gautam_adani)

JP Morgan gives 'overweight' rating to Adani Group bonds

| @indiablooms | Dec 07, 2024, at 03:17 am

Mumbai: US investment bank JP Morgan has assigned an 'overweight' rating to four bonds issued by the Adani Group, citing the group's capacity to scale and grow through internal cash flows, which reduces the likelihood of credit stress, mdia reports said.

In its report, JP Morgan rated three bonds of Adani Ports & SEZ and one from Adani Electricity Mumbai Ltd (a subsidiary of Adani Energy Solutions Ltd) as 'overweight.' It maintained a neutral stance on five other Adani bonds and assigned an 'underweight' rating to a bond issued by Adani Green Energy Ltd, according to news agency PTI.

JP Morgan categorizes its bond ratings into three groups: 'overweight,' equivalent to a buy recommendation; 'neutral,' akin to a hold recommendation; and 'underweight,' which is comparable to a sell recommendation.

Discussing potential risks, the report noted that Adani bonds might perform better than expected if there is a swift resolution of US SEC and Department of Justice allegations against founder-chairman Gautam Adani and key aides over bribery charges, successful refinancing of upcoming bonds and credit facilities, and improved operational performance.

The Adani Group has dismissed the charges as baseless.

Following initial volatility, "spreads of the group's bonds, (since action by US authorities), seem to have settled, widening by about 100-200 basis points, with short tenor seeing more spread widening due to higher dollar prices," JP Morgan stated.

The report also highlighted near-term offshore debt maturities across several Adani  entities, including Adani Ports, Adani Green, Adani Airport Holdings (fully owned by Adani Enterprises), Ambuja Cement bidco entities, and Adani Energy Solutions.

Regarding Adani Green, it noted, "Overall, we take varying degrees of comfort, and believe that key to watch among the bond-issuing entities are mainly Adani Green, which has a decent-size loan (USD 1.1 billion) due in March 2025."

Although the bonds are not secured by collateral, JP Morgan emphasized their robust cash flows.

"Our preference is for cashflows over security," remarked Love Sharma of JP Morgan in the report.

The ability of Adani Ports to scale and grow using internal cash flows provides "strong comfort on the intrinsic equity value of such a business, which in turn reduces the scope for credit stress," the report added.

Upside risks to JP Morgan's neutral rating include "a quick resolution of the SEC/DoJ charges; successful refinancing of the upcoming bonds and credit facilities; and improved operating performance," the report stated.

Conversely, downside risks to its 'overweight' and 'neutral' ratings include an adverse outcome from the SEC/DoJ cases, related-party transactions within the group, and debt-funded mergers or capital expenditure leading to weaker credit metrics.

Support Our Journalism

We cannot do without you.. your contribution supports unbiased journalism

IBNS is not driven by any ism- not wokeism, not racism, not skewed secularism, not hyper right-wing or left liberal ideals, nor by any hardline religious beliefs or hyper nationalism. We want to serve you good old objective news, as they are. We do not judge or preach. We let people decide for themselves. We only try to present factual and well-sourced news.

Support objective journalism for a small contribution.
Related Videos
Nirmala Sitharaman on Budget 2024 Jul 23, 2024, at 09:30 pm
PM Modi on Budget 2024 Jul 23, 2024, at 09:30 pm