Adani Ports looking to raise US$ 500mn via dollar bonds

• Proceeds will be used to repay existing debt, for capital expenditures and for general corporate purposes of the company and its subsidiaries in India and Sri Lanka

LIVEMINT: Adani Ports & Special Economic Zone Ltd (APSEZ), the flagship ports operator of billionaire Gautam Adani’s group, is looking to raise at least US$ 500 million on offshore debt through dollar bonds.

The latest dollar bond issuance by Adani Ports follows a US$ 500 million issuance in January and will be used for both refinancing existing debt as well as for capex.

The proceeds will be used to repay existing debt, for capital expenditures and for general corporate purposes of the company and its subsidiaries in India and Sri Lanka, the company said.

The bond issuance was approved by the company’s board on Wednesday. Axis Bank, Barclays, Bank of America, Citi and others are advising the company on the fundraising.

“The investor roadshows have been started and the deal should be closed soon. The company plans to raise at least US$ 500 million through this bond offering,” said a person aware of the company’s plans.

On Wednesday, international rating agency Moody’s assigned a Baa3 rating to the proposed bonds, with a negative outlook. 

“APSEZ’s Baa3 issuer rating primarily reflects the company’s strong market position as the largest port developer and operator in India by cargo volume. The rating also takes into consideration the long-term growth potential of India’s economy as a whole, a key driver behind the large increase in the volume of traded goods over the past few years.

APSEZ reported strong 16.5 percent growth in container cargo volumes in fiscal 2021 compared with the previous year and increased its market shares in India to 41.2 percent compared with 35.5 percent in fiscal 2020, the rating agency noted.

“Moody’s expects that APSEZ’s performance over next two to three years will be driven by the ramp-up of capacity relating to its recently acquired and commissioned ports and terminals and its growing share of containers, with the addition of new terminals to its portfolio. 

That said, in the short term APSEZ is operating in a challenging global economic environment as a result of the coronavirus outbreak and continued global trade tensions. The cargo growth was a moderate 2.2 percent in fiscal 2021 after adjusting for the Krishnapatnam acquisition, which contributed 20 million tonnes for a six-month period,” it said.

Moody’s expects APSEZ’s overall volumes to increase by 20 percent -25 percent in fiscal 2022, which will be helped by the recent acquisitions of the Dighi and Gangavaram ports.