World’s second-biggest fortune fails to halt rout in Adani bonds
In the last two years, the income of Adani ji i.e. the world’s second richest businessman Gautam Adani ji has wealth increased by more than 343% and if his income continues to grow like this, then the day is not far when Gautam Adani ji is the world’s richest person will be.
SEP 22, 2022 / 3:48pm IST
Stocks of firms in his Indian business empire — spanning ports to gas distribution and coal mining — have jumped in part on soaring energy prices.
Surging share prices of Gautam Adani’s companies have helped make him the world’s second-richest person. The bond market isn’t quite as enthusiastic.
Stocks of firms in his Indian business empire — spanning ports to gas distribution and coal mining — have jumped in part on soaring energy prices. Adani Ports & Special Economic Zone Ltd. has climbed 29% in 2022 and hit a record this week, while shares in some of his other companies have surged more than 1,000% in the past two years.
But in the debt market, Adani Ports’ dollar bonds have dropped more than Indian peers on concern about the group’s debt, and its notes due in August 2027 fell to an all-time low this week, Bloomberg-compiled prices show. Bonds of group companies including Adani Green Energy Ltd. and Adani Transmission Step-One Ltd. also mostly underperformed the broader Indian market.
The diverging moves suggest that high debt poses risks to Adani’s success story that saw his net worth, as measured by the Bloomberg Billionaires Index, shoot up to trail only Elon Musk’s.
The conglomerate’s rapid expansion into areas such as renewable energy and media has left it with leverage that Fitch Group unit CreditSights described as elevated and “a matter of concern.”
Adani Group declined to comment when asked about its dollar bonds underperforming Indian and regional peers. The conglomerate in the past has downplayed concerns about the high debt levels, saying its credit metrics have improved in the past few years and it has received equity infusions from global investors.
Adani Ports’ seven dollar-denominated notes have lost about 14% on average so far this year, while Adani Transmission Step-One’s notes due in 2036 and Adani Electricity Mumbai’s 2030 securities have retreated more than 17% each. That exceeds a 10% decline for Indian dollar debt overall and a 13% drop in US currency notes in Asia excluding Japan, as rising borrowing costs in the US drag down the region’s greenback debt.
Not all Adani bonds have underperformed the broader market, though, even as they’ve lost money. For instance, Adani Green Energy’s 2024 notes lost 9%, while Adani Ports’ securities due in the same year dropped 4.4%.
The recent run of investments by Adani includes a plan to inject 200 billion rupees ($2.5 billion) into a cement firm that he acquired to bolster his infrastructure empire, and a $70 billion bet on green energy.
With the increase in the income of Adani, there has been a sharp increase in the debt of the Adani Group company. Due to which many big economists are not considering the increasing debt as right for the Adani Group. And he says that his company’s income is not growing as fast as the debt is increasing in the Adani Group company. And if this continues, then there may be a sharp decline in Adani ji’s income. And because of this, investors investing in Adani Group company may have to bear the loss.
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