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Adani Ports & Special Economic Zone (SEZ) is tapping the international debt market to raise up to $1 billion to fund its capex plans and also to retire some of its debt, according to merchant banking sources.
The proposed issue has a ‘Baa3’ rating from the global ratings agency Moody’s Investors Service.
“Adani Ports is doing a United States (US) dollar issue soon and will be raising $ 750 million to $ 1 billion,” merchant banking sources said but refused to share more details like the tenure of the debt or the likely pricing.
The Gautam Adani-run company and is the flagship entity of the Adani group, will use the proceeds for capital expenditure, refinancing a part of the existing debt and other permissible uses under the external commercial borrowings guidelines, the source said.
The rating reflects the company’s market position as the country’s largest port developer and operator by volume, and the strength of its Mundra Port concession, Moody’s said in the rating note.
The Baa3 rating is also predicated on the company continuing to execute its various projects within time and cost budgets, while adhering to regulatory approval processes to minimize the risk of future difficulties. The agency also given a stable outlook on the rating.
“The bonds will represent a senior unsecured obligation and will rank equally with all of Adani Ports’ existing and future unsecured and unsubordinated indebtedness,” the agency said.
The agency said given the ranking of the bonds is pari pasu to all of the company’s existing and future unsecured and unsubordinated debt, while the rating of these bonds follow that of its existing senior unsecured bonds issued in 2015 and 2017, respectively.
Adani Ports reported a 13 per cent growth in container traffic in FY19 and this traffic contributed 41 per cent of the total cargo handled by it during the fiscal year.
Moody’s expects Adani’s performance to be driven by capacity addition relating to its recently commissioned ports and terminals, and further increase in the share of containers, with the addition of new terminals.
The agency said it is unlikely to upgrade the ratings in the near term, given the business profile and financial strategy.
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