Adani Electricity Mumbai (AEML) is likely to have priced its 10-year dollar bonds on Wednesday with the final price target on the bonds coming in at 230 bps over the corresponding US Treasury yield, according to information provided by sources till the time of going to press.
The bonds had received an initial price target of 270 basis points over the 10-year US Treasury yield. “The firm was looking to raise close to a billion dollars. The issue received significant response,” said a source aware of the matter.
Moody’s Investors Service assigned a first-time provisional rating of (P)Baa3 to the proposed senior secured bullet bonds to be issued by Adani Electricity Mumbai (AEML). The outlook is ‘stable’.
“Proceeds from the proposed bonds — together with capital infusion of $282 million in the form of subordinated shareholder loans — will be used to repay all existing senior debt at AEML except for senior working capital facilities, with any excess amount to be used for general corporate purposes,” Moody’s stated in a note.
Adani Electricity Mumbai is a 100% subsidiary of Adani Transmission. In August 2018, Adani Transmission announced that it has acquired Reliance Infrastructure’s integrated business of generation, transmission and retail electricity distribution. AEML owns and operates ATL’s integrated utility business in Mumbai. The integrated business includes the power generation units based at Dahanu, Power transmission network across Mumbai and Maharashtra and the retail power distribution network in Mumbai suburbs. Its distribution network spans over 400 square kilometres, catering to over 2.9 million customers, according to the Adani Electricity’s website.
There has been a barrage of overseas bond issuances from the country this year with Indian entities having raised close to $3.5 billion from the overseas bond market in 2020. ReNew Power recently raised $450 million through dollar bonds. Other entities that hit the overseas bond market this year include Exim Bank, Manappuram Finance, Shriram Transport, Future Retail and Power Finance Corporation.
While Exim Bank raised a billion dollars, Manappuram Finance raised $300 million through their respective bond issuances. Shriram Transport Finance, on the other hand, came out with its first international social bond issuance through which it raised $500 million. Kishore Biyani’s Future Retail, in its debut bond transaction, raised $500 million. Power Finance Corporation recently concluded a $750 million bond issue. January also saw Novelis, which is a wholly-owned subsidiary of Hindalco, raise $1.6 billion recently.
Foreign currency bond issuances out of India had hit a record high in 2019, crossing the $21 billion-mark for the first time ever. The previous high was recorded in 2014 at around $18 billion.